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On Jan. 1, UUU Company had 500 units of Product 234 that cost $55 each. On...

On Jan. 1, UUU Company had 500 units of Product 234 that cost $55 each. On Jan. 10, 500 units costing $60 each were purchased. On Jan. 20, 1,000 units costing $63 each were purchased. 1,550 units were sold during the month. Therefore, using the average cost periodic method, the Jan. 31 inventory of 450 units of Product 234 (rounded to the nearest dollar) should be:

Group of answer choices

$24,750

$26,700

$27,113

$28,350

Business   Accounting   
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Answer #1

Answer: The correct answer is $27,113

Total Units = Beginning Inventory + Units of Jan 10 + Units of Jan 20
Total Units =500 + 500 + 1,000
Total Units = 2,000

Cost of Goods Available for Sale = 500 * $55 + 500 * $60 + 1,000 *$63
Cost of Goods Available for Sale = $27,500 + $30,000 + $63,000
Cost of Goods Available for Sale = $120,500

Cost per Unit = Cost of Goods Available for Sale / Total Units
Cost per unit = $120,500 / 2,000
Cost per unit = $60.25

Ending Inventory = Ending Units *Cost per unit
Ending Inventory = 450 * $60.25
Ending Inventory = $27,113

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