Question

se the following information to answer question 11 and 12. The following information was available from the inventory records of Rich Company fo January: Units Unit Cost Balance at January 1 Purchases: Total Cost $29,310 3,000 $9.77 January 6 2,000 $10.30 $20,600

Answer 1

(11).

Answer is option (B). $12284

Explanation;

Total cost of inventory available for sale ($29310 + $20600 + $28917) = $78827

Total number of units available for sale (3000 + 2000 + 2700) = 7700

Thus average cost per unit ($78827 / 7700) = $10.237

As per information of the question, ending units are = 1200

Thus value of inventory (1200 * $10.237) = $12284.4 (Approx.)

(12).

Answer is option (D). $12432

Explanation;

First of all let’s calculate moving average on January 6 and January 26;

Average cost on January 6;

Average cost ($29310 + $20600) / (3000 + 2000) = $9.982 per unit

Average cost on January 26;

Average cost will be calculated as follow;

($29310 + $20600 + $28917 – $24955) / (3000 + 2000 + 2700 - 2500)

= $53872 / 5200

= $10.36 per unit

Ending units are given = 1200

Thus value of ending inventory will be (1200 * $10.36) = $12432