Asked by Daniel Bathaei on Jul 24, 2024
Verified
What is the ending inventory balance at the end of the year rounded to nearest dollar using the average cost method?
A) $1,685
B) $1,575
C) $1,805
D) $3,705
Periodic System
An inventory system where updates to inventory accounts are made periodically at the end of a reporting period, rather than continuously, often requiring physical counts.
Average Cost Method
An inventory valuation method that calculates the cost of goods sold and ending inventory value based on the average cost of all items in inventory.
Ending Inventory
The inventory that remains unsold at the end of an accounting period.
- Calculate inventory balances, cost of goods sold, and inventory turnover metrics.
Verified Answer
RB
Ruchika BatishJul 27, 2024
Final Answer :
A
Explanation :
Average cost per unit = [($60 × 10 units) + ($65 × 25 units) + ($68 × 30 units) + ($75 × 15 units)] / (10 units + 25 units + 30 units + 15 units) = $67.375
Ending inventory using the average cost method = $67.38 × 25 units = $1,685
Average cost per unit = [($60 × 10 units) + ($65 × 25 units) + ($68 × 30 units) + ($75 × 15 units)] / (10 units + 25 units + 30 units + 15 units) = $67.375
Ending inventory using the average cost method = $67.38 × 25 units = $1,685
Learning Objectives
- Calculate inventory balances, cost of goods sold, and inventory turnover metrics.