Question

The following lots of Commodity Z were available for sale during the year. Use this information to answer the question. Beginning inventory First purchase Second purchase Third purchase 10 units at $30 25 units at $32 30 units at $34 10 units at $35 The firm uses the periodic system. There are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method? Oa. $690 Ob. $620 Oc. $659 Od. $655 040 CHO MY Work 1 more Check my work uses remaining O o

Answer 1

Beginning inventory = 10 units at $30

First purchase = 25 units at $32

Second purchase = 30 units at $34

Third purchase = 10 units at 35

Average cost per unit = ( 10 x 30 + 25 x 32 + 30 x 34 + 10 x 35) /( 10+25+30+10)

= (300+800+1,020+350)/75

= 2,470/75

= 32.93

Ending inventory units = 20

Cost of ending inventory = Average cost per unit x Ending inventory units

= 32.93 x 20

= $659

Third option is correct option.

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