Question

Coronado has the following inventory information. July1Beginning Inventory15 units at $20$300 7Purchases90 units at $232070 22Purchases20 units at $25500 $2870 A physical count of merchandise inventory on July 31 reveals that there are 25 units on hand. Using the average-cost method, the value of ending inventory is

Answer 1

$574

Step-by-step explanation:

Given:

Beginning inventory 15 units @ $20 = 15 × 20 = $300

Purchases of 90 units @ $23 = 90 × 23 = $2,070

Purchases of $20 units @25 = $500

Total cost = 300 + 2070 + 500 = $2,870

Total units purchased = 15 + 90 + 20 = 125 units

Average cost = Total cost / total units purchased

= 2,870 / 125

= $22.96

Ending inventory units = 25

As per average cost method, value of ending inventory = 25 × 22.96

= $574