Question

Question 20 of 20

A business purchases two units at $50 each, and later purchases three more
at $60 each. Shortly afterwards, one is sold. What is the cost of the inventory
remaining under the weighted average method?
OA. $234
OB. $224
O C. $220
OD. $230
A
SUBMIT

Answer 1

The cost of the inventory remaining under the weighted average method is $224. Option B is correct.

To solve this problem

Firstly, let calculate the total cost of the units purchased:

2 units ×$50/unit+3 ×$60/unit =$100 +$180 =$280

Now, let calculate the total number of units purchased:

2units + 3 units = 5 units

Let's figure out the average price per unit:

Total cost / Total units equals the average cost per unit.

280/5 = $56/units

Let's now determine the remaining inventory's (4 units) cost:

4x $56/units =$224

So, the cost of the inventory remaining under the weighted average method is $224