Question

QS 5-6 Perpetual: Inventory costing with weighted average LO P1

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 300 units. Ending inventory at January 31 totals 130 units.

	Units	Unit Cost
Beginning inventory on January 1	270	$	2.50
Purchase on January 9	60		2.70
Purchase on January 25	100		2.84

Required:
Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)
Weighted Average

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Answer 1

Ans:

Ending Inventory on Jan 25:

Particulars	Units	Per Unit $	Cost $
Beginning inventory	270	2.50	675
Purchase on Jan 9	60	2.70	162
Purchase on Jan 25	100	2.84	284
Total	430		1,121
Weighted average cost per unit	Total cost/Total units	$1,121/430	2.61

Workings of Ending inventory table:

Weighted average method
Particulars	Ending inventory
	Units	Cost per unit $	Amount $
Jan 1	270	2.50	675
Jan 9	270	2.50	675
	60	2.70	162
Average cost	330	2.54 (837/330)	837
Jan 25	270	2.50	675
	60	2.70	162
	100	2.84	284
Average cost	430	2.61 (1,121/430)	1,121
Jan 26	130 (430-300)	2.61	339.30

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