Question

Cheyenne Corp. uses a perpetual inventory system. Data for product E2-D2 includes the following purchases. Date Number of Units Unit Price May 7 40 $17 July 28 30 22 On June 1, Cheyenne. sold 20 units, and on August 27, 30 more units. Calculate the average cost of the goods sold in the sale.

Answer 1

The COGS for the June 1st sale is $17 per unit, and the COGS for the August 27th sale is $20 per unit.

Step-by-step explanation:

Date Number of units Unit balance Unit cost Average cost

May 7 40 40 $17 $17

June 1 (20) 20 $17

July 28 30 50 $22 $20

August 27 (30) 20 $20

The average COGS after the purchase on July 28 = [(20 x $17) + (30 x $22)] / 50 = ($340 + $660) / 50 = $20