Question

In its first month of operations, Coronado Industries made three purchases of merchandise in the following...

In its first month of operations, Coronado Industries made three purchases of merchandise in the following sequence: (1) 260 units at $8, (2) 360 units at $10, and (3) 460 units at $11. Assuming there are 160 units on hand at the end of the period.

Compute the cost of the ending inventory under the average-cost method. (Round answer to 0 decimal places, e.g. 5,275.)

Homework Answers

Answer #1

Answer:

Cost of the ending inventory under the average-cost method =$1591

Working notes for the above answer is as under

Average Unit cost

= Total Value of Goods purchased / Number of Goods Purchased

Average Unit cost

Unit

Price

Cost

260

8

2080

360

10

3600

460

11

5060

1080

10740

Avearge Unit cost (10740/1080) =9.94

9.94

Cost of the ending inventory under the average-cost method

=Ending inventory x Average Unit cost

=160 x 9.944

=1591

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