Question

In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 240 units at $8, (2) 340 units at $10, and (3) 440 units at $11. Assuming there are 140 units on hand at the end of the period.b)Compute the cost of the ending inventory under the average-cost method, assuming there are 140 units on hand. (Round answers to 0 decimal places, e.g. 125.)

Answer 1

Answer:

$1,395

Explanation:

Total cost of Inventory purchased

= (No. of units × Per unit price) +  (No. of units × Per unit price) +  (No. of units × Per unit price)

= (240 × 8) +(340 × 10) +(440 × 11)

= 1,920 + 3,400 + 4,840

= $10,160

Number of units purchased = 240 + 340 + 440

                                              = 1,020

Average cost per unit = total cost /No. of units

= 10,160 /1,020

= $ 9.9608 per unit

Cost of ending inventory = 140 × 9.9608

= $1,395