Question

Exercise 6-16 Kaleta Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 410 $8 $3,280 12 Purchase 820 9 7,380 23 Purchase 615 10 6,150 30 Inventory 205 Assume a sale of 902 units occurred on June 15 for a selling price of $11 and a sale of 738 units on June 27 for $12. Calculate cost of goods available for sale.

Answer 1

Answer:

Cost of goods available for sale=$1,640

Explanation:

To calculate the cost of goods available for sale, we need to first calculate the available units of inventory;

Available inventory=Inventory purchased-inventory sold

where;

Inventory purchased are as follows;

On June 1>>>>>purchased 410 units each at $8

On June 12>>>>purchased 820 units each at $9

On June 23>>>>purchased 615 units each at $10

Total inventory purchased=(410+820+615)=1,845 units

Inventory sold are as follows;

On June 15>>>>sold 902 units each at $11

On June 27>>>>sold 738 units each at $12

Total inventory sold=(902+738)=1,640 units

Available inventory=(1,845-1,640)=205 units

The cost of goods sold can be expressed as;

Cost of goods available for sale=Cost per unit×number of units

where;

Number of units of inventory=205

Cost per unit=least cost per unit=$8

replacing;

Cost of goods available for sale=(8×205)=1,640

Cost of goods available for sale=$1,640