Question

A company uses a periodic inventory system. On April 1, the company had 9 items of beginning inventory with a cost of $13 per unit. On April 18, the company purchased 15 units at $14 per unit. Then, on April 29, the company sold 14 units. Using weighted average, the cost of the 14 units sold is closest to _____.

Answer 1

Answer:

$190.75

Explanation:

In this question, we are asked to use weighted average method to find the cost to which the 14 units sold is closest to.

We proceed as follows;

On April one, there were 9 items in the inventory with a cost of $13 per item. The total cost here would be 13 * 9 = $117

On April 18th, we had 15 items at $14 cost per piece which gives a total of 14 * 15 = $210

On April 29, 14 units were sold. We need to find the cost to which this was closest using the weighted cost approach.

The total costs for April 1 and 18 would be $117+ $210 = $327

The weighted average cost per unit on both dates is $327/24 = $13.625

The cost of 14 units sold would be = 14 * $13.625 = $190.75

Answer 2

Answer:

Using weighted average, the cost of the 14 units sold is closest to $190.75

Explanation:

The Weighted Average Cost method calculates a new cost per units with each purchase made.

The new cost per unit after the purchase on April 18 is calculated as follows:

Cost per Unit = Total Cost / Total Number of Units

                      =  ((9 units × $13) + (15 units × $14)) / (15+9)

                      =  $327 /24

                      =  $ 13.63

The cost of sale on April 29 is calculated on the cost per unit as follows:

Cost of Sale = Number of units sold × Cost per unit

                     = 14 × $13.63

                     = $190.75