In: Accounting

# A company had the following purchases and sales during its first month of operations: January 1:

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)

## Solutions

##### Expert Solution

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