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13 January, 07:25

Cheyenne Corp. uses a perpetual inventory system. Data for product E2-D2 includes the following purchases. Date Number of Units Unit Price May 7 40 $17 July 28 30 22 On June 1, Cheyenne. sold 20 units, and on August 27, 30 more units. Calculate the average cost of the goods sold in the sale.

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  1. 13 January, 11:12
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    The COGS for the June 1st sale is $17 per unit, and the COGS for the August 27th sale is $20 per unit.

    Explanation:

    Date Number of units Unit balance Unit cost Average cost

    May 7 40 40 $17 $17

    June 1 (20) 20 $17

    July 28 30 50 $22 $20

    August 27 (30) 20 $20

    The average COGS after the purchase on July 28 = [ (20 x $17) + (30 x $22) ] / 50 = ($340 + $660) / 50 = $20
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