Question

Glasgow Enterprises started the period with 65 units in beginning inventory that cost $3.40 each. During the period, the company purchased inventory items as follows. Glasgow sold 335 units after purchase 3 for $3.40 each. Purchase No. of Items Cost 1 310 $ 3.90 2 145 $ 4.00 3 60 $ 4.40 Glasgow's ending inventory under weighted average would be approximately: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

Value of ending inventory =  $960.4

Explanation:

To value inventory, The weighted average inventory method uses the  value of weighted average price of all the batches purchased till date. The weighted average price is re-computed whenever a new batch of stock is received.

Step 1

Calculate the weighted average price

For Glasgow, we can work out the weighted average price as follows:

The total value = (65 × $3.40) +( 310× $3.90) +( 145 × $4.00) + ( 60 × $4.40)

                        = $2,274

The total quantity purchased before sales

= 65 + 310 + 145 + 60

= 580 units

Weighted average price

= $2,274/ 580 units = $3.92

Step 2

Calculate the closing inventory units

Closing inventory = opening inventory + purchases - sales

= 65 + 310 + 145 + 60 - 335

= 245 units

Step 3

Value the closing inventory

= 245 ×  $3.92

= $960.4

Value of ending inventory =  $960.4