Final answer:
To find the cost of ending inventory using the average cost method in a perpetual inventory system, we calculate the average cost before each sale and subtract the sold units to update the remaining inventory. The cost of ending inventory after two sales is $163.33.
Step-by-step explanation:
The question revolves around the calculation of the cost of ending inventory using the average cost method in a perpetual inventory system. Three inventory purchases were made on March 2 for $150, March 7 for $160, and March 15 for $180. The company sold one unit each on March 10 for $230 and on March 20 for $250.
Firstly, we need to find the average cost of the inventory purchased before the first sale on March 10. To calculate this, we add the cost of the two units purchased by that date ($150 + $160 = $310) and divide by the number of units (2), resulting in an average cost of $155 per unit. After the sale of one unit on March 10, there are two units left with a new average cost calculation, which now includes the third unit purchased on March 15. The combined cost for these three items is $490 ($150 + $160 + $180), and dividing this by the three units gives us an average cost of $163.33 per unit. Post the sale on March 20, only one unit remains, and therefore, the cost of the ending inventory is $163.33.