Question

At May 1, 2020, Sheridan Company had beginning inventory consisting of 190 units with a unit cost of $7.30. During May, the company purchased inventory as follows: 720 units at $7.30 590 units at $5.80 The company sold 1030 units during the month for $14 per unit. Sheridan uses the average cost method. The average cost per unit for May is

Answer 1

Answer:

$6.71 per unit

Explanation:

The computation of average cost method is given below:-

Beginning Inventory

= 190 units × $7.30

= $1,387

Purchases

= 720 units × $7.30

= $5,256

Purchases

= 590 units × $5.80

= 3,422

Total units = 1,500

Total cost = $10,065

So, average cost per unit

Total cost ÷ Total number of units

= $10,065 ÷ 1,500

= $6.71 per unit

Therefore, to calculate the average cost per unit for May we simply divide 10,065 from 1,500