Question

The following lots of a particular commodity were available for sale during the year Beginning inventory 10 units at $52 First purchase 16 units at $54 Second purchase 26 units at $24 Third purchase 18 units at $60 The firm uses the periodic system, and there are 22 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year rounded to nearest dollar according to the average cost method? Do not round intermediate calculations. a. $1,168 b. $1,176 c. $1,144 d. $971

Answer 1

Answer Ending inventory = $971.

Explanation-

AVERAGE COST METHOD
	Goods purchased		Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
						10	52.00	520
	16	54.00				10	52.00	520
						16	54.00	864
	26	24.00				10	52.00	520
						16	54.00	864
						26	24.00	624
	18	60.00				10	52.00	520
						16	54.00	864
						26	24.00	624
						18	60.00	1080
Average Cost						70	44.1142857142857	3088
			48	44.1142857142857	2117.485714	22	44.1363636363636	971
Totals			48		2117.485714	22		971