Question

ameson Company uses average cost and a perpetual system. On January 1, the company had 600 units of inventory at an average cost of $55 per unit for a total cost of $33,000. The company purchased and sold inventory during the month as follows: Purchases: January 10: 1,000 units at $59 = $59,000 January 20: 800 units at $62 = $49,600 Sales: January 12: 1,200 units January 28: 900 units What is the average cost per unit that should be used to determine the cost of the units sold on January 28

Answer 1

The average cost per unit that should be used to determine the cost of the units sold on January 28 is $60.50

Computation:

	Qty	Unit Cost	Total Cost
Beginning Inventory	600	55	33000
Purchases
Jan - 10	1000	59	59000
Available	1600	57.5	92000
Sales
Jan - 12	1200	57.5	69000
Balance	400		23000
Purchases
Jan - 20	800	62	49600
Total available	1200	60.5	72600
Sales
Jan - 28	900	60.5	54450
Total available	300	60.5	18150

The average rate on January 12^th is computed as $69,000 / 1600 units = $57.50
The average rate on January 20^th is computed as $72,600 / 1200 units = $60.50