Question

Inventory records for Dunbar Incorporated revealed the following:

Date Transaction Number Unit
of Units Cost
Apr. 1 Beginning inventory 550 $2.33
Apr. 20 Purchase 310 2.68
Dunbar sold 560 units of inventory during the month. Ending inventory assuming weighted-average cost would be:__________.
a. $737.
b. $694.
c. $817.
d. $752.

Answer 1

a. $737.

Step-by-step explanation:

The computation of the ending inventory using weighted average cost is shown below:

But before that first determine the average cost per unit

= (Beginning cost + purchase cost) ÷ (Beginning units + purchased units)

= (550 × $2.33 + 310 × $2.68) ÷ (550 units + 310 units)

= ($1,281.5 + $830.8) ÷ (860 units)

= $2.46

Now the ending inventory is

= (860 units - 560 units) × $2.46

= $737