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


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