Question

Given the tollowing data, c cakulate the cost of goods sold using the average-cost method Round average cost per unit calculations to two decimal places Round final answer to the nearest dollar Date Item Unit 5/10 109 Beginning inventory 60 units at $10 per unit Purchase of inventory 20 units at $30 per unit Purchase of inventory 20 units at $22 per uni g inventory 28 units O A $1.181 OB. S1.443 O C. $4217 O D. $1,640

Answer 1

Solution:
	Answer is A. $1,181
Working Notes:
	In weighted average method , total cost of goods available is divided by total units available and at this rate units are charged to the units sold during the period.
Notes:
1/1	From beginning inventory	600	I
	[60 units x $10 ]
5/10	From Purchases	600	II
	[20 x 30 ]
10/9	From Purchases	440	III
	[20 x 22 ]
	Total Cost	1,640	A = I+ II+III
	÷
	Total units	100	B
	[60+20+20]
	average cost per unit	16.400	C=A/B
Now	Computation of units sold
	Units sold = Beginning + Purchases - Ending
	Units sold = 60 + 20+20 - 28
	Units sold =72 units
Then	Value of cost of goods sold under average cost method
	COGS = Units sold x Average cost per unit
	COGS = 72 x $16.40
	COGS = $ 1180.80
	COGS = $ 1181
Please feel free to ask if anything about above solution in comment section of the question.