Question

April 5 $10 April 10 $12 April 15 $14 April 20 $16 April 22 $17 One unit is sold on April 25. The company uses the weighted average inventory costing method. Identify the cost of the ending inventory on the balance sheet. (Round your answer to 2 decimal places.)

Answer 1

Answer: $55.20

Explanation:

The Weighted Average Cost method of valuing inventory averages the cost of the entire inventory in stock and then uses the resultant cost to value all of the inventory.

As it is an average, it works by adding up all the costs and dividing by the number of units.

1 unit of each good costing the prices listed were purchased so,

= $10 + $12 + $14 + $16 + $17

= $69

5 units were purchased so the average is,

= 69/5

= $13.80 is the cost per inventory unit.

One unit was sold on April 25

4 units therefore remain.

Cost of ending inventory is,

= 13.80 * 4

= $55.20

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