Question

9) A company just starting business made the following four inventory purchases in June: June 1 June 10 June 15 June 28 150 units 200 units 200 units 150 units $ 390 585 630 510 $2,115 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is a. $683. b. $755. C. $825. d. $1,360.

Answer 1

Answer

• Correct Answer = Option ‘B’ $ 755

Average Method	Cost of Goods available for sale
	Units	Cost/unit	COG for sale
Beginning Inventory	150	$                   2.60	$                            390.00
Purchases:
10-Jun	200	$                   2.93	$                            585.00
15-Jun	200	$                   3.15	$                            630.00
28-Jun	150	$                   3.40	$                            510.00
TOTAL	700		$                        2,115.00

>Average Cost per unit = $ 2115 / 700 units = $ 3.02

>Ending Inventory = 250 units x $ 3.02 = $ 755 ANSWER