Question

In its first month of operations, Concord Corporation made three purchases of merchandise in the following sequence: (1) 650 units at $4, (2) 750 units at $6, and (3) 850 units at $7. Calculate average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Average unit cost $enter an average unit cost in dollars eTextbook and Media List of Accounts Compute the cost of the ending inventory under the average-cost method, assuming there are 550 units on hand at the end of the period. (Round answer to 0 decimal places, e.g. 125.) The cost of the ending inventory $enter the cost of the ending inventory in dollars

Answer 1

Answer: Average unit cost=$5.800 per unit

Cost of Ending inventory =$3,190

Explanation:

Average unit cost

First purchase= 650 units x $4=$2,600

Second Purchase=750 units x $6 =$4,500

Third Purchase=    850 units x $7 = $5,950

Total Cost =                                     $13,050

Average unit cost = Total cost/ number of units =13,050/(650+750+850)= 13,050/2250= $5.8 per unit

Cost of Ending inventory = 550 unts at hand x $5.8 =$3,190

(using the average cost method)