Question

THE Company employs a periodic inventory system and
sells its inventory to customers for $10 per unit.
THE Company had the following inventory information
available for the month of May:

May 1    Beginning inventory 280 units @ $3.80 cost
         per unit
May 6    Purchased 350 units @ $4.90 cost per unit
May 8    Purchased 240 units @ $4.10 cost per unit
May 14   Sold 410 units
May 19   Purchased 400 units @ $5.75 cost per unit
May 23   Sold 270 units
May 27   Sold 120 units
May 29   Purchased 230 units @ $3.90 cost per unit

The dollar amount of ending inventory shown on THE
Company's May 31 balance sheet using the weighted
average method was equal to:

Answer 1

Cost of units available for sale = Beginning inventory + Purchases

= (280 * $3.8) + (350 * $4.9) + (240 * $4.1) + (400 * $5.75) + (230 * $3.9)

= $1,064 + $1,715 + $984 + $2,300 + $897

= $6,960

Number of units available for sale = 280 + 350 + 240 + 400 + 230

= 1,500

Units sold = 410 + 270 + 120

= 800

Units in ending inventory = Number of units available for sale - Units sold

= 1,500 - 800

= 700

Weighted average cost per unit = Cost of units available for sale / Number of units available for sale

= $6,960 / 1,500

= $4.64

Ending inventory = 700 units * $4.64

= $3,248