Answer:
inventory at the end of the year =1645
so correct option is $1,645
Explanation:
given data
Beginning inventory = 10 units at $55
First purchase = 25 units at $65
Second purchase = 30 units at $68
Third purchase = 15 units at $70
commodity on hand = 25 units
to find out
amount of the inventory at the end of the year using the average cost method
solution
we know that average costing is here = Cost of goods available for sale ÷ Total units from beginning inventory and purchases .......................1
now we first find average cost per unit as per given below
units price per unit cost
opening inventory 10 $55 $550
first purchase 25 $65 $1625
second purchase 30 $68 $2040
third purchase 15 $70 $1050
total 80 $65.81 $5265
so here average price per unit is
= 65.81
and
number of units for sold will be = 80 - 25
number of units for sold = 55
and inventory at the end of the year will be
inventory at the end of the year = 25 × 65.81
inventory at the end of the year =1645
so correct option is $1,645