Asked by Alexandre Al Mokhtari on May 05, 2024
Verified
The ending inventory cost rounded to nearest dollar using average cost is:
A) $1,353
B) $1,263
C) $1,375
D) $1,150
Periodic Inventory System
An accounting method where inventory levels and the cost of goods sold are determined at the end of the accounting period.
Average Cost
The total cost of producing goods divided by the number of goods produced, representing the per-unit cost.
Ending Inventory
The total value of goods available for sale at the end of an accounting period, after accounting for sales and new purchases.
- Determine stock values using different assessment techniques, including LIFO, FIFO, and average cost calculation, within the realms of both perpetual and periodic inventory systems.
Verified Answer
TZ
tuong zhang zhunMay 11, 2024
Final Answer :
B
Explanation :
The average cost is calculated by dividing the total cost of goods available for sale by the total units available for sale. Total cost = (10 units * $55) + (25 units * $60) + (30 units * $65) + (15 units * $70) = $550 + $1500 + $1950 + $1050 = $5050. Total units = 10 + 25 + 30 + 15 = 80 units. Average cost per unit = $5050 / 80 units = $63.125. Ending inventory = 80 units - 60 units sold = 20 units. Ending inventory cost = 20 units * $63.125 = $1,262.50, rounded to the nearest dollar is $1,263.
Learning Objectives
- Determine stock values using different assessment techniques, including LIFO, FIFO, and average cost calculation, within the realms of both perpetual and periodic inventory systems.