Question
In: Accounting
ammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase...
ammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase 5 units at $9.00 per unit. August 18 Purchase 7 units at $11.00 per unit. August 29 Sale 10 units. August 31 Purchase 10 units at $12.00 per unit. What is the per-unit value of ending inventory on August 31?
Solutions
Expert Solution
Answer - weighted average cost per unit on August 31= $11.69 Per Unit
Working Notes :
Company Uses weighted average perpetual inventory system so Cost per unit is calculated on each purchase or sale by formula
weighted average cost per unit = Total Inventory Cost / total Units balance.
| Purchases | Issues | Balance | |||||||
| Date | Quantity | Rate | Amount | Quantity | Rate | Amount | Quantity | Rate | Amount |
| Aug 2 | 5 | $9 | $45 | 5 | $9 | $45 | |||
| 18 | 7 | $11 | $77 |
12 |
$10.17 |
$122 |
|||
| 29 | 10 | $10.17 | $101.7 | 2 | $10.17 | $20.3 | |||
| 31 | 10 | $12 | 120 | 12 | $11.69 | $140.3 | |||
On Aug 18 - Total Cost=$45+$77= $122 ; Total Units = 5 +7 = 12; weighted average Per Unit Cost = $122/12 units = $10.17
On Aug 29 - Sale of 10 units at $10.17 (weighted
average Cost Unit calculated above) Balance 2 units at $10.17 per
unit
On 31 Aug - Purchase of 10 units at $12 per unit so total unit Balance is (10+2)= 12 unit total cost is ($120+$20.3) = $140.3
hence, Ending weighted average cost per unit on 31 Aug = $140.3/12 units = $11.69
ekkarill92 answered 11 months agoRelated Solutions
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