Martinez Corp. uses a perpetual inventory system. Data for product E2-D2 include the purchases shown below. Date Number of Units Unit Price May 7 44 $16 July 28 33 21 On June 1, Martinez Corp. sold 22 units, and on August 27, 33 more units.

Find average cost for June 1 and August 27.

Answer: Average cost on June 1=$352

Average cost on August 27=$462

Step-by-step explanation: periodic review or perpetual inventory is one of the two types of inventory management technique, the operation of raw materials needed by a company is studied such that we can say for certain when the operation department of the company will be out of raw materials or stock so as to order for replenishment. in order words. a specific raw materials level is determined, at this level new stock or raw materials must be ordered by the company to replenish the used stock.

In the question above, the cost incur after selling 22units of products on June 1will be the holding cost of the remaining stock available (44-22) * 16=$352

On August 27,33 units were sold so we have before then 22 units from may 7purchase and 33 units from July 28 purchase, assuming a first in first out FIFO scenario in which stocks are sold as they are bought in that order, the 33 sold will be made up of 22 old stock and 11 of the new stock.

Therefore the average cost will be 22*21=$462