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Answered
The following information is available for Clancy Company: Beginning inventory 600 units at $4 First purchase 900 units at $6 Second purchase 500 units at $7.20\begin{array}{ll}\text { Beginning inventory } & 600 \text { units at } \$ 4 \\\text { First purchase } & 900 \text { units at } \$ 6 \\\text { Second purchase } & 500 \text { units at } \$ 7.20\end{array} Beginning inventory First purchase Second purchase 600 units at $4900 units at $6500 units at $7.20 Assume that Clancy uses a periodic inventory system and that there are 760 units left at the end of the month.
Instructions
Compute each of the following under the average-cost method:
(a) Cost of ending inventory.
(b) Cost of goods sold.
On Jun 22, 2024
Average cost/unit =$5.70($11,400÷2,000)600×$4=$2,400900×$6=5,40050000‾×$7.20=3.600‾2,000‾‾$11,400‾‾\begin{array} { l } \text { Average cost/unit } = \$ 5.70 ( \$ 11,400 \div 2,000 ) \\\\600 \times \$ 4 = \$ 2,400 \\900 \times \$ 6 = \quad 5,400 \\\underline { 50000 } \times \$ 7.20 = \underline { 3.600 }\\ \underline { \underline { 2,000 } } \quad\quad\quad\quad\underline { \underline { \$11,400}}\\\end{array} Average cost/unit =$5.70($11,400÷2,000)600×$4=$2,400900×$6=5,40050000×$7.20=3.6002,000$11,400 (a) Cost of ending inventory = $4332 (760 × $5.70)
(b) Cost of goods sold = $7068 (1240 × $5.700) or $11400 - $4332