Sandhill Company uses a periodic inventory system. For April, when the company sold 550 units,...


Sandhill Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available.

UnitsUnit CostTotal Cost
April 1 inventory 230$26$5,980
April 15 purchase 3603111,160
April 23 purchase4103413,940

Calculate the weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

Weighted average cost per unit $_____

Compute the April 30 inventory and the April cost of goods sold using the average-cost method. (Round answers to O decimal places, e.g. 2, 760.)

Ending Inventory $_____

Cost of goods sold $_____

Weighted Average Method for Inventory Valuation:

A firm may use any one of the four methods available for inventory valuation, namely, FIFO (First-In-First-Out), LIFO (Last-In-First-Out), weighted average method or specific identification method. Moreover, the firm may use the periodic inventory system or perpetual inventory system. Under the periodic system, the purchases and sales are adjusted at the end of every period while under the perpetual system, the inventory is updated every time a purchase or sale is made.

Answer and Explanation: 1

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The weighted average cost per unit is given by:

  • = Total cost of the entire inventory before sales / total number of units in the inventory before...

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Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average


Chapter 6 / Lesson 11

Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.

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