Question

Assume the following data for Jones Company for the current fiscal year: Beginning Inventory 10 units at $ 7 each March 18 purchase 15 units at $ 9 each June 10 purchase 20 units at $10 each October 30 purchase 12 units at $11 each On December 31, a physical count reveals 18 units in ending inventory. Under the weighted average method, the cost of ending inventory as reported on the balance sheet would be (rounded answer to the nearest dollar): Select one: a. $170 b. $167 c. $192 d. $142 e. $179

Answer 1

Answer:

a. $170

Explanation:

For computing the ending inventory first we have to determine the average cost per unit which is shown below:

= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units + purchase inventory units)

= (10 units × $7 + 15 units × $9 + 20 units × $10 + 12 units × $11) ÷ (10 units + 15 units + 20 units + 12 units)

= ($70 + $135 + $200 + $132) ÷ (57 units)

= ($537) ÷ (57 units)

= $9.42 per unit

Now the ending inventory is

= $9.42 × 18 units

= $169.56 i.e $170