Question

Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 265 $ 153 6/5 Purchase 465 $ 173 11/10 Purchase 165 $ 213 During the year, Maxim sold 530 units. What is cost of goods sold using the average cost method? (Do not round intermediate computations.)

Answer 1

Cost of goods sold as per average cost method = $92,458.5

Step-by-step explanation:

As for the information provided as follows:

Opening Inventory 265 units @ $153 each = $40,545

Purchase 465 units @ $173 each = $80,445

Purchase 165 units @ $213 each = $35,145

Total data 895 units = $156,135

Average cost per unit = $156,135/895 = $174.45

In average cost method simple average is performed, whereas in weighted average weights are assigned.

Sale is of 530 units

Cost of goods sold as per average cost method = $174.45
`*` 530 = $92,458.5