Question

Vaughn Manufacturing uses the periodic inventory system. For the current month, the beginning inventory consisted of 476 units that cost $63 each. During the month, the company made two purchases: 718 units at $66 each and 365 units at $68 each. Vaughn Manufacturing also sold 1195 units during the month. Using the average cost method, what is the amount of ending inventory

Answer 1

See below

Step-by-step explanation:

The computation of ending inventory is shown below;

But first we need to determine the average cost per unit.

Average cost per unit

= (476 units × $63 + 718 units × $66 + 365 units × $68) ÷ (476 units + 718 units + 365 units)

= ($29,988 + $47,388 + $24,820) ÷ (1,559 units)

= $102,196 ÷ 1,559

= $65.55

Now, the ending inventory unit

= 1,559 units - 1,195 units

= 364 units

Finally , the ending inventory

= $65.55 × 364 units

= $23,860