Question

Rocky Mountain Bikes' Colorado warehouse has 50 Pack Rat Deluxe Bike Baskets in stock at a moving average price of $25.13 each. They purchase 300 from Rat-a-tat-tat Bike Products at $25.54 each and transfer 100 from their Texas warehouse where the moving average price is $25.25 each. Assuming all of the baskets mentioned above have been received in Colorado and there have been no sales from Colorado, what is the current moving average price and total inventory valuation for Pack Rat Deluxe Bike Baskets in the Colorado warehouse.

Answer 1

Rocky Mountain Bikes

Current moving average price is:

$25.43

Total inventory valuation is:

$11,443.50

Step-by-step explanation:

Colorado warehouse:

Item Qty Price Moving Total Total Value

average price Qty

Inventory 50 $25.13 50 $1,256.50

Purchase 300 $25.54 $25.48 350 $8,918.50

Transfer 100 $25.25 $25.43 450 $11,443.50

Rocky Mountain Bikes' Colorado warehouse uses the moving average price to value the inventory. The moving average price is computed by creating a constantly updated average price. This smoothens the price data.