Sandhill Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available.
|Units||Unit Cost||Total Cost|
|April 1 inventory||230||$26||$5,980|
|April 15 purchase||360||31||11,160|
|April 23 purchase||410||34||13,940|
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
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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fromChapter 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.