Question

The following units of an inventory item were available for sale during the year:

Beginning inventory 7 units at $52

First purchase 15 units at $54

Second purchase 28 units at $55 T

hird purchase 16 units at $57

The firm uses the periodic inventory system. During the year, 26 units of the item were sold.

The value of ending inventory rounded to the nearest dollar using average cost is (Round average cost per unit to three decimal place.)

a.$1,462

b.$1,390

c.$2,198

d.$1,352

Answer 1

		Units	Cost Per unit	Units*Cost per unit
	Beginning Inventory	7	$                  52	$                              364
	First Purchase	15	$                  54	$                              810
	Second Purchase	28	$                  55	$                          1,540
	Third purchase	16	$                  57	$                              912
	Total	66		$                          3,626
		Average Cost per unit = $3626/66 units
			$            54.94	per unit
	Ending inventory = 66 units -26 units sold
	=40 units
	Endding inventory = 40 units * $54.94 per unit
	$                                 2,198
	Correct Option: C