Question

A company has a beginning inventory of $ 20,000 and purchases during the year of $ 160,000. The beginning inventory consisted of 2,000units and 8,000 units were purchased during the year. 3,880 units remain in ending inventory. The cost of the ending inventory using the​ average-cost method will​ be: (Round any intermediary calculations to two decimal places and your final answer to the nearest​ dollar.)

Answer 1

Step-1:Calculation of weighted average cost per unit
	Particulars			Units	Total Cost
	Beginning Inventory			2,000	$       20,000
	Purchase			8,000	$   1,60,000
	Total			10,000	$   1,80,000
	Average cost per unit			=	$   1,80,000	/	10,000
				=	$         18.00
Step-2:Calculation of Cost of ending inventory
	Cost of Ending Inventory			=	Units in ending Inventory x Averge cost per unit
				=	3880	x	$    18.00
				=	$       69,840
	Thus,
		Cost of ending inventory is			$ 69,840