Question

Maxim Corp. has provided the following information about one of its products:

• January 1 - Beginning Inventory 280 units at $156 per unit
• June 5 – Purchased 480 units at $176 per unit
• November 10 – Purchased 180 units at $216 per unit
• During the year, Maxim sold 560 units.

What is cost of goods sold (rounded) using the average cost method?

Group of answer choices

$74,880.

$101,513.

$72,880.

$99,513.

Answer 1

$99,513

Explanation:

Average cost per unit = Total Purchases(In value) / Total purchases(In units)

Calculation of Total Purchases in value and units

Units Purchased	Rate	Calculation for Total value	Total value
280 units	$156/unit	(280*156)	$ 43,680
480 units	$176/unit	(480*176)	$ 84,480
180 units	$216/unit	(180*216)	$ 38,880
940 Units		Total Purchases(Value)	$ 1,67,040

Average cost per unit = Total Purchases(In value) / Total purchases(In units)

= $1,67,040/940 units

= $ 177.70 per unit

Cost of Goods sold = Sales(Units)* Average cost per unit

= 560*$177.7

= $99,513