Question

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.)

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