A company has a beginning inventory of $50,000 and purchases during the year of $150,000. The beginning inventory consists of 3,000 units and 8,000 units were purchased during the year. 3,780 units remain in ending inventory. The cost of the ending inventory using the average minus cost method will be: (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

Question

Business

Vanessa Parsons

5 June, 03:09

A company has a beginning inventory of $50,000 and purchases during the year of $150,000. The beginning inventory consists of 3,000 units and 8,000 units were purchased during the year. 3,780 units remain in ending inventory. The cost of the ending inventory using the average minus cost method will be: (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

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Dylan Short · Answer 1

Answer: $66,938

Explanation: The beginning inventory is calculated thus:

$50,000 / 3000 units = $16.67

while the purchases during the period is:

$150,000 / 8000 units = $18.75

Ending inventory value using average minus cost method is thus:

Ending inventory = 3,780

Average cost = $16.67+18.75 = $35.42

Cost of ending inventory = $35.42/2=17.71

Ending inventory cost = $17.71 * 3,780=66,938