Question

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): 41 units at $106 per unit 73 units at $89 per unit 175 units at $52 per unit Sales for the year totaled 267 units, leaving 22 units on hand at the end of the year. Ending inventory using the average cost method is: ____ (Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount.)

Answer 1

$1,518.15

Step-by-step explanation:

The company uses the average cost method and the periodic inventory system. Weighted average cost per unit is calculated by the following formula:

Weighted Average Unit Cost =Total Cost of Inventory /Total Units in Inventory

Total Cost of Inventory in the first year:

Unit Unit cost Total

41 $106 $4,346

73 $89 $6,497

175 $52 $9,100

Total 289 $19,943

Weighted Average Unit Cost = $19,943/289

Cost of goods sold = ($19,943/289) x 267 = $18,424.85

Ending inventory = ($19,943/289) x 22 = $1,518.15