Question

During the past year, Sweeter than Honey Inc. sold 920 beehives. Inventory records for the year are as follows: DATE QUANTITY COST TOTAL January 1 Beginning Inventory 180 $38 $ 6,840 January 30 Purchase 300 32 9,600 March 16 Purchase 150 12 1,800 November 10 Purchase 420 15 6,300 December 14 Purchase 400 43 17,200 Total available for sale 1,450 $41,740 Using the average cost method of inventory pricing, calculate the dollar value of the ending inventory. (Round your answer to 2 decimal places) Group of answer choices $19,128.00 $28,772.00 $15,258.70 $22,541.80

Answer 1

Using the average cost method, the dollar value of the ending inventory for Sweeter than Honey Inc. is calculated as $15,253.40. This value is obtained by finding the average cost per unit ($28.78) and multiplying it by the unsold inventory quantity (530 units). None of the answer choices provided match this calculated value.

Step-by-step explanation:

To calculate the dollar value of the ending inventory using the average cost method of inventory pricing, we need to compute the average cost per unit and then apply that average to the quantity of unsold inventory. First, we calculate the total cost of all purchases and beginning inventory:

Total cost of available for sale = $41,740

We then divide this by the total number of units available for sale to determine the average cost per unit:

Average cost per unit = Total cost of available for sale / Total units available for sale
= $41,740 / 1,450 units = $28.78 per unit (rounded to two decimal places)

Next, to calculate ending inventory, we subtract the number of units sold from the total units available for sale:

Ending inventory quantity = Total units available for sale - Units sold
= 1,450 units - 920 units = 530 units

Now we calculate the dollar value of the ending inventory by multiplying the ending inventory quantity by the average cost per unit:

Dollar value of ending inventory = Ending inventory quantity * Average cost per unit
= 530 units * $28.78 per unit = $15,253.40 (rounded to two decimal places)

None of the provided answer choices are correct based on our calculation. The student should double-check the figures provided and the mathematical operations.