Question

In its first month of operations, Tamarisk, Inc. made three purchases of merchandise in the following sequence: (1) 500 units at $8, (2) 600 units at $9, and (3) 700 units at $11.

Calculate average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Average unit cost $enter an average unit cost in dollars Show List of Accounts

Compute the cost of the ending inventory under the average-cost method, assuming there are 400 units on hand at the end of the period. (Round answer to 0 decimal places, e.g. 125.) The cost of the ending inventory $enter the cost of the ending inventory in dollars

Answer 1

Average Unit cost = Total cost of goods available/Total units

= (500*8+600*9+700*11)/(500+600+700)

= $9.5 per unit

Cost of Ending Inventory = Units in ending inventory*Average cost per unit

= 400*9.5

= $3,800