Question

Use the weighted-average inventory method for the following problem: The beginning inventory on August 1 has two items that are valued at $100 each. On August 8, three items were purchased at $250 per unit. On August 15, three units were sold. On August 25, three units were purchased for $275 each. What is the average cost of units in this inventory

Answer 1

Average cost units in inventory=$1,205

Explanation:

August 8

Weighted average cost in August 8

=( (2 × 100 )+ (3 × 250))/5=$190

Cost of goods sold in August 15 = 190× 3= 570

Balance in inventory in August 15 = 950 - 570 =380

Weighted average cost in August 25 = 380 + (3* 275)/(2+3)= 241 per

Average cost of units = $241 per unit

Average cost units in inventory in August 25= $241×5 =1205

Average cost units in inventory=$1,205