Question

The Morton Company uses the periodic inventory system. During the month of September, the beginning inventory consisted of 4,800 units that cost $12 each. Two purchases were also made by the company that month. The first was for 2,000 units at $13 each, and the second for 8,000 units at $13.50 each. Additionally, Morton sold 8,600 units during the month. If the average cost method is used (rounding unit costs to the nearest cent), the amount of cost of goods sold will be________

Answer 1

The cost of good sold for 8,6000 units will be $111,335.60.

Step-by-step explanation:

Please find the below for detailed explanations and calculations:

As Morton uses average cost method, the unit cost will be the same for each unit and equal to (total inventory purchase cost + cost for beginning inventory)/ ( beginning inventory + inventory purchased)

As a result, we have Unit cost = (2,000 x 13 + 8,000 x 13.50 +4,800 x 12) / (2,000+8,000+4,800) = $12.946 per unit

Thus, Cost of good sold of 8,600 units is 12,946 x 8,600 = $111,335.60.