Question

Given the following​ data, calculate the cost of goods sold using the​ average-cost method. Round average cost per unit calculations to two decimal places. Round final answer to the nearest dollar.Date Item Unit ​1/1 Beginning inventory 70 units at $20 per unit5/10 Purchase of inventory 20 units at $ $20 per unit ​10/9 Purchase of inventory 20 units at $ $32 per unit12/31 Ending inventory 28 units

Answer 1

The cost of goods sold using the​ average-cost method is $1,818.76

Step-by-step explanation:

The computation of the average cost per unit is shown below:

= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit ) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units)

= (70 units × $20 + 20 units × $20 + 20 units × $32) ÷ (70 units + 20 units + 20 units)

= ($1,400 + $400 + $640 units ) ÷ (110 units)

= ($2,440 units) ÷ (110 units)

= $22.18 per unit

Now the cost of goods sold equals to

= (Beginning inventory units × average cost per unit + purchase inventory units × average cost per unit - ending inventory units × average cost per unit)

= 70 units × $22.18 per unit + 40 units × $22.18 per unit - 28 units × $22.18 per unit

= $1552.60 + $887.20 - $621.04

= $1,818.76

The purchase units = 20 units + 20 units = 40 units