Question

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 250 $10 $ 2,500 April 15 purchase 400 12 4,800 April 23 purchase 350 13 4,550 1,000 $11,850 Compute the April 30 inventory and the April cost of goods sold using the average-cost method.

Answer 1

Answer:

The April 30 inventory and the April cost of goods sold using the average-cost method is $7,110 and $ $4,740 respectively

Explanation:

The computation of the average cost per unit is shown below:

= (Beginning inventory units × price per unit + purchase inventory units × price per unit + purchase inventory units × price per unit ) ÷ (Beginning inventory units + purchase inventory units + purchase inventory units)

= (250 units × $10 + 400 units × $12 + 350 units × $13) ÷ (250 units + 400 units + 350 units)

= ($2,500+ $4,800 + $4,550) ÷ (1,000 units)

= ($11,850) ÷ (1,000 units)

= $11.85

Now the cost of goods sold equals to

= (Beginning inventory units × average cost per unit + purchase inventory units × average cost per unit - ending inventory units × average cost per unit)

= (250 units × $10 + 400 units × $12 + 350 units × $13) - (400 units × $11.85)

= $11,850 - $4.,740

= $7,110

And, the ending inventory units equal to

= (Ending inventory units × average cost per unit)

= (400 units × $11.85)

= $4,740

The ending inventory units = 1,000 - 600 = 400 units