Answer: $2,050
Explanation:
Given the following ;
First purchase(January 31):
Unit purchased = 100
Price per unit = $50
Second purchase(February 28):
Unit purchased = 150
Price per unit = $35
Using the Weighted average inventory costing method whereby price of inventory is calculated each time goods are added to the inventory. This is done by calculating the total cost of each purchases divided by the total units in the inventory.
WEIGHTED COST = (cost of First inventory +cost of Second inventory)÷(unit of first + unit of second inventory)
Weighted cost = (100×$50 + 150×$35) ÷ (100 + 150)
Weighted cost = $(5000 + 5250) ÷ (250) = $10,250 ÷ 250 = $41.00 per unit
UNIT sold (March-December) = 200
Unit left ( Ending Inventory) = 200 - 150 = 50
Cost of ending inventory = 50 × $41 = $2,050