Question

Crane uses the periodic inventory system. For the current month, the beginning inventory consisted of 7400 units that cost $11.00 each. During the month, the company made two purchases: 3100 units at $12.00 each and 12200 units at $12.50 each. Crane also sold 12700 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month

Answer 1

Answer:

$151,673

Explanation:

Average cost method calculate the cost of the inventory on the average price basis. Cost of goods sold is the cost of the goods sold in the given period.

Description                   Units       Rate                   Value    

Beginning Inventory     7,400    $11.00                 $81,400

Purchases                     3,100     $12.00                $37,200

Purchases                     12,200   $12.50               $152,500

Total  Inventory            22,700   $11.94273128    $271,100

Sale                               12,700    $11.94273128    $151,673

Cost of Goods Sold = $271,100 x 12,700 / 22,700 = $151,673