Question

In its first month of operations, Sunland Company made three purchases of merchandise in the following sequence: (1) 200 units at $7, (2) 540 units at $8, and (3) 125 units at $9. Calculate the weighted-average unit cost.

Answer 1

Answer:

$7.91

Explanation:

The weighted-average unit cost uses the weighted concept to determine the costs of goods sold or inventory costs. Its formula is a is below

weighted -average costs =  costs of goods available for  sale

      units available for sale

For Sunland company,

Total costs of goods available =(200 x $7) +(540 x $8) + (125 x$9)

=1400 + 4320+1125= 6845

Total units available for sale= $200 + $540 +$125 =$865

WAC = 8645/865

=$7.91