Question

Bufford Appliance uses a perpetual inventory system. For its flat-screen television sets, the January 1 inventory was 3 sets at $650 each. On January 10, Bufford purchased 7 units at $670 each. The company sold 2 units on January 8 and 4 units on January 15.

Compute the ending inventory under moving-average cost-

$

Answer 1

Ans.	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	3	650	1950				3	650	1950
	8-Jan				2	650	1300	1	650.00	650
	10-Jan	7	670	4690				8	667.50	5340
	15-Jan				4	667.5	2670	4	667.50	2670
	Total				Cost of goods sold		3970	Ending inventory		2670
	Moving average balance rate is calculated by using the following formula:
	Average cost per unit = Total cost available / Total units available
	*If units are purchased, these are added to available units the total cost of purchase is added to the available cost.
	And then the average cost per unit is calculated by using the above formula.
	*The units are sold on the rate at which the balance is available.