Asked by Brendan Aikin on Jul 24, 2024
Verified
What is the year-end inventory balance using the average cost method? Use the information provided in the table to answer this question
A) $1,380
B) $1,375
C) $1,510
D) $1,250
Average Cost Method
A method of inventory valuation where the cost of goods sold and ending inventory are determined by calculating the weighted average of the costs of all items available for sale.
Year-End Inventory
The total counted value of inventory that a business owns at the end of its fiscal year, which is used to calculate cost of goods sold and profitability.
- Work out the cost of goods sold by leveraging different inventory strategies.
- Achieve an understanding of the essential principles of inventory costing methods, for instance, FIFO, LIFO, average cost, and specific identification.
Verified Answer
ET
Eldric TajanlangitJul 27, 2024
Final Answer :
A
Explanation :
Average cost per unit = [($61 × 5 units) + ($63 × 15 units) + ($74 × 10 units) + ($77 × 10 units)] / (5 units + 15 units + 10 units + 10 units) = $69
Ending inventory using the average cost method = $69 × 20 units = $1,380
Average cost per unit = [($61 × 5 units) + ($63 × 15 units) + ($74 × 10 units) + ($77 × 10 units)] / (5 units + 15 units + 10 units + 10 units) = $69
Ending inventory using the average cost method = $69 × 20 units = $1,380
Learning Objectives
- Work out the cost of goods sold by leveraging different inventory strategies.
- Achieve an understanding of the essential principles of inventory costing methods, for instance, FIFO, LIFO, average cost, and specific identification.
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