Question

In its first month of operations, Crane Company made three purchases of merchandise in the following sequence: (1) 380 units at $7, (2) 480 units at $9, and (3) 580 units at $10. Calculate average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Average unit cost In its first month of operations, Crane Company made three purchases of merchandise in the following sequence: (1) 380 units at $7, (2) 480 units at $9, and (3) 580 units at $10. Compute the cost of the ending inventory under the average-cost method, assuming there are 280 units on hand at the end of the period.

Answer 1

average unit cost = $8.875

the cost of the ending inventory = $2,485

Step-by-step explanation:

average unit cost = Total cost ÷ units available for sale

= $12,780 ÷ 1,440

= $8.875

the cost of the ending inventory = unit cost x ending units

= $8.875 x 280

= $2,485