Question

A company purchased 90 units for $20 each on January 31. It purchased 160 units for $25 each on February 28. It sold 160 units for $70 each from March 1 through December 31. If the company uses the weighted-average inventory costing method, calculate the amount of Cost of Goods Sold on the income statement for the year ending December 31. (Assume the company uses the perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

Answer 1

$3,712.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) using the weighted-average inventory costing method, we need to determine the weighted-average cost per unit first.

Total cost of 90 units purchased on January 31: 90 x $20 = $1,800

Total cost of 160 units purchased on February 28: 160 x $25 = $4,000

Total cost of 250 units: $1,800 + $4,000 = $5,800

Weighted-average cost per unit: $5,800 / 250 units = $23.20 per unit

To calculate COGS:

Units sold: 160 units

Cost of goods sold: 160 x $23.20 = $3,712