Question

Sage Hill Inc. uses a periodic inventory system and reports the following for the month of June. Date Explanation Units Unit Cost June 1 Inventory 110 $5 Total Cost $550 2,190 12 Purchases 365 6 Purchases 210 1,470 Inventory 250 Calculate weighted average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Weighted-average unit cost $ 6.146

Answer 1

Solution 1:

Weighted average unit cost = Cost of goods available for sale / units available for sale

= ($550 + $2,190 + $1,470) / (110 + 365 + 210)

= $4,210 / 685 = $6.146 per unit

Solution 2:

Computation of COGS and ending inventory - Periodic FIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	110	$5.00	$550	110	$5.00	$550.00	0	$5.00	$0.00
Purchases:
12-Jun	365	$6.00	$2,190	325	$6.00	$1,950.00	40	$6.00	$240.00
23-Jun	210	$7.00	$1,470	0	$7.00	$0.00	210	$7.00	$1,470.00
Total	685		$4,210	435		$2,500.00	250		$1,710.00

Computation of COGS and ending inventory - Periodic LIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	110	$5.00	$550	0	$5.00	$0.00	110	$5.00	$550.00
Purchases:
12-Jun	365	$6.00	$2,190	225	$6.00	$1,350.00	140	$6.00	$840.00
23-Jun	210	$7.00	$1,470	210	$7.00	$1,470.00	0	$7.00	$0.00
Total	685		$4,210	435		$2,820.00	250		$1,390.00

Computation of COGS and ending inventory - Periodic Weighted Average cost method
Particulars	Cost of goods available for sale			Cost of goods sold - Average cost			Ending Inventory - Average cost
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	110	$5.00	$550
Purchases:
12-Jun	365	$6.00	$2,190
23-Jun	210	$7.00	$1,470
Total	685	$6.146	$4,210	435	$6.146	$2,674	250	$6.146	$1,536