Question

Assume ShoeFanatic.com began October with 14 units of inventory that cost a total of $210. During October, ShoeFanatic.com purchased and sold goods as follows: Oct. 8 Purchase 42 units @ $16 14 Sale 35 units @ $32 22 Purchase 28 units @ $18 27 Sale 42 units @ $32 Suppose ShoeFanatic.com used the weighted average inventory costing method and the perpetual inventory system. Compute the weighted average unit cost of the company's inventory on hand at October 8. Round weighted average unit cost to the nearest cent. O A. $17.00 O B. $15.75 OC. $15.50 OD. Cannot be determined from the data given

Answer 1

Answers

• Question #1: Weighted Average
  >total cost on Oct 8 = $ 210 + (42 units x $ 16) = 210 + 672 = $ 882
  >total units on Oct 8 = 14 + 42 = 56 units
  >Weighted average unit cost on Oct 8 = $ 882 / 56
  = $ 15.75
  Correct Answer = Option ‘B’ $ 15.75
• Question #2: FIFO
  >Cost of Goods Sold Jan 14 sale of 30 units = (12 units’ cost $ 240) + (remaining 18 units at $ 21 rate of 8^th Jan purchase)
  = 240 + 378
  = $ 618
  Correct Answer = Option ‘D’ $ 618