Question

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): 41 units at $106 per unit 73 units at $89 per unit 175 units at $52 per unit Sales for the year totaled 267 units, leaving 22 units on hand at the end of the year. Ending inventory using the average cost method is: ____ (Do not round unit cost calculation. Round your final answer to the nearest whole dollar amount.)

Answer 1

Answer:

$1,518.15

Explanation:

The company uses the average cost method and the periodic inventory system. Weighted average cost per unit is calculated by the following formula:

Weighted Average Unit Cost =Total Cost of Inventory /Total Units in Inventory

Total Cost of Inventory in the first year:

                Unit Unit cost      Total

                   41   $106       $4,346  

                   73   $89        $6,497  

                   175   $52        $9,100  

Total           289              $19,943  

Weighted Average Unit Cost = $19,943/289

Cost of goods sold = ($19,943/289) x 267 = $18,424.85

Ending inventory = ($19,943/289) x 22 = $1,518.15