Asked by Elizabeth Offer on Jul 22, 2024
Verified
A company purchased inventory as follows: 150 units at $6
350 units at $7
The average unit cost for inventory is
A) $6.00.
B) $6.50.
C) $6.70.
D) $7.00.
Average Unit Cost
The cost incurred for producing a single unit, calculated by dividing the total cost of production by the number of units produced.
Units
A measure of quantity representing the amount of product or service.
Inventory
The quantity of goods or materials that a business has on hand at any given time.
- Gauge the concluding stock quantity and establish the cost of goods sold utilizing multiple inventory costing methodologies (FIFO, LIFO, average cost).
Verified Answer
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Final Answer :
C
Explanation :
The average unit cost is calculated by dividing the total cost of inventory by the total number of units. Total cost = (150 units * $6) + (350 units * $7) = $900 + $2450 = $3350. Total units = 150 + 350 = 500. Average cost = $3350 / 500 units = $6.70.
Learning Objectives
- Gauge the concluding stock quantity and establish the cost of goods sold utilizing multiple inventory costing methodologies (FIFO, LIFO, average cost).
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