Question

Neverstop Corporation sells item A as part of its product line. Information about the beginning inventory, purchases, and sales of item A are given in the following table for the first six months of 2017. The company uses a perpetual inventory system: Purchases Sales Number of Units 590 Unit Cost $4.30 Number of Units Sales Price $5.80 Date January 1 (beginning inventory) January 24 February 8 March 16 June 11 690 $4.40 390 650 $6.00 390 $4.55 Required: 1. Compute the cost of ending inventory by using the weighted average costing method. (Do not round intermediate calculations and round the final answer to 2 decimal places.) Ending inventory

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Part 1) Firstly we have to calculate average inventory cost per unit as on Febraury 8 =(((590-390) *4.3)+(690*4.4))/(200+690) = $4.37753 4.37753 Average inventory cost as on June 11 = (((890-650) *4.37753)+(390*4.55))/(240+390) = (1050.607+1774.5)/630 = $ 4.4842964 - No. of units in ending inventory = Total units available for sale - units sold = (590+690+390)-(390+650) = 630 Units Cost of ending inventory = no. of units * average cost = 630 *4.4842964 = $ 2825.11 Thus the final answer cost of ending inventory = $ 2825.11