Question

Concord uses the periodic inventory system. For the current month, the beginning inventory consisted of 7300 units that cost $9.00 each. During the month, the company made two purchases: 3100 units at $10.00 each and 12200 units at $10.50 each. Concord also sold 12800 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month

Answer 1

Answer:

The amount of cost of goods sold for the month is $127,321.60.

Explanation:

The Weighted Average Cost Method uses a Unit Cost calculated on the Average to value the Cost of Goods Sold and Ending Inventory.

Since the Periodic Inventory System is being used, the Unit Cost will be calculated on Goods Available for Sale.

Average Unit Cost = Total Cost of Goods Available for Sale ÷ Units Available for Sale.

Total Cost of Goods Available for Sale = 7,300 ×  $9.00 + 3,100 × $10.00 + 12,200 × $10.50 = $224,800

Units Available for Sale = 7,300 + 3,100 + 12,200 = 22,600

Therefore,

Average Unit Cost =  $224,800 ÷ 22,600 = $9.947

Cost of Goods Sold = Units Sold × Units Available for Sale

                                 = 12,800 × $9.947

                                 = $127,321.60