Question

A company had the following purchases and sales during its first month of operations:

 

January 1: Purchased 10 units at $400 per unit; January 9: Sold 6 units at $1200 per unit; January 17: Purchased 8 units at $550 per unit; January 27: Sold 7 units at $1200 per unit

 

Using the Periodic weighted average method, what is the value of cost of goods sold? (Round weighted average cost per unit to 2 decimal places)

Answer 1

 Periodic weighted average method:

The weighted average method for costing enables an average cost assignment to inventory rather than singling out units.

 

 

Cost of goods sold = Number of units sold x weighted average cost

 

Weighted average cost:

Date	Quantity	Amount
1-Jan	10	$400
17-Jan	8	$550
Total	18	$950

Weighted average cost = $950 / 18 units = $52.78 per unit

Cost of goods sold = Number of units sold x weighted average cost

                                 = ( 6 +7 ) x $52.78

                                 = $686.14

Cost of goods sold = $686

Cost of goods sold = $686