Question

Bonita Industries uses the periodic inventory system. For the current month, the beginning inventory consisted of 481 units that cost $60 each. During the month, the company made two purchases: 719 units at $63 each and 361 units at $65 each. Bonita Industries also sold 1203 units during the month. Using the average cost method, what is the amount of ending inventory

Answer 1

$22,389

Step-by-step explanation:

The computation of the ending inventory is shown below:

But before that the average cost per unit and the ending units should be determined

The average cost per unit is

= (481 units × $60 + 719 units × $63 + 361 units × $65) ÷ (481 units + 719 units + 361 units)

= ($28,860 + $45,297 + $23,465) ÷ (1,561 units)

= $62.54

Now the ending inventory units is

= 1,561 units - 1,203 units

= 358 units

Now finally the ending inventory is

= 358 units × $62.54

= $22,389