Question

A company has a beginning inventory of​ $50,000 and purchases during the year of​ $150,000. The beginning inventory consists of​ 3,000 units and​ 8,000 units were purchased during the year.​ 3,780 units remain in ending inventory. The cost of the ending inventory using the average minus cost method will​ be: (Round any intermediary calculations to two decimal places and your final answer to the nearest​ dollar.)

Answer 1

Answer: $66,938

Explanation: The beginning inventory is calculated thus:

$50,000 / 3000 units = $16.67

while the purchases during the period is:

$150,000 / 8000 units = $18.75

Ending inventory value using average minus cost method is thus:

Ending inventory= 3,780

Average cost = $16.67+18.75= $35.42

Cost of ending inventory = $35.42/2=17.71

Ending inventory cost = $17.71 * 3,780=66,938