Question

Inventory records for Water Incorporated revealed the following: Date Transaction Number of Units Unit Cost July 1 Beginning inventory 570 $ 2.49 July 25 Purchase 420 2.69 Water Inc. sold 630 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice $1,027. $932. $895. $927.

Answer 1

Value of closing inventory = $925.2

Step-by-step explanation:

To value inventory, The weighted average inventory method uses the value of weighted average price of all the batches purchased till date. The weighted average price is re-computed whenever a new batch of stock is received.

The average cost per unit = Total cost of quantities purchased / total units available til date

Weighted average cost

= ((570×2.49) + ( 420 ×2.69))/ (570 +420)

=$2.57

Closing inventory = opening inventory + purchases - sales

Closing inventory = 570+420 -630 = 360

The value of the closing inventory = 2.57× 360= $925.2

Value of closing inventory = $925.2