Question

Alpha company bought 75 units of inventory for $4 each and 25 units of inventory for $5 each. Alpha's weighted average cost per unit is _____________.

1) 4.5
2) 4.25
3) 5
4) 4

Answer 1

The weighted average cost per unit for Alpha company can be calculated by finding the average cost of each group of units purchased. The weighted average cost per unit for Alpha company is $4.25.

Step-by-step explanation:

The weighted average cost per unit for Alpha company can be calculated by finding the average cost of each group of units purchased. First, multiply the number of units by their respective cost:

• 75 units x $4 = $300
• 25 units x $5 = $125

Then, add the total costs together and divide by the total number of units:

Total cost = $300 + $125 = $425

Total units = 75 + 25 = 100

Weighted average cost per unit = Total cost / Total units = $425 / 100 = $4.25

Therefore, the answer is 4.25.