In: Accounting
A company sells 1,200 units during the first quarter of the year at a selling price of $25 per unit. In addition, the company has a beginning inventory of 600 units that were purchased at $10 per unit, and the following purchases and sales.
Date Units sold Units purchased Cost per unit
January 10 300 $11
January 25 450
February 7 400 $12
February 14 200
March 5 300 $14
March 27 550
If the company uses a periodic inventory system and the weighted average cost method of inventory valuation, then what is the company's ending inventory?
a. |
$5,400 |
|
b. |
$4,600 |
|
c. |
$4,575 |
|
d. |
$4,200 |
|
e. |
$4,000 |
Answer: c.$ 4,575
Working:
Ending Inventory | $ 4,575 | (1600-1200)*11.44 |
Average cost per unit | ||
Units | Rate | Cost |
600 | $ 10.00 | $ 6,000 |
300 | $ 11.00 | $ 3,300 |
400 | $ 12.00 | $ 4,800 |
300 | $ 14.00 | $ 4,200 |
1600 | $ 18,300 | |
$ 11.44 |