Question

Use the following data of MakrelMakrel ?Sales, Inc.: Unit Total Units Units Cost Cost Sold Beginning...

Use the following data of

MakrelMakrel

?Sales, Inc.:

Unit

Total

Units

Units

Cost

Cost

Sold

Beginning inventory

20

$3

$60

Purchase on Apr 25

40

5

200

Purchase on Nov 16

11

8

88

Sales

55

?

?

MakrelMakrel

?Sales' cost of ending inventory using the average cost method is

A.

$ 78$78.

B.

$ 440$440.

C.

$ 60$60.

D.

$ 113$113.

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Homework Answers

Answer #1

A. $ 78

Working:

a. Average cost per unit calculation
Units Total costs
Beginning Inventory 20 $          60
Purchase on April 25 40 $        200
Purchase on Nov 16 11 $          88
Total 71 $        348
Average cost per unit = $        348 / 71 = $       4.90
b. Cost of ending inventory
Cost of Ending Inventory = Units in Ending Inventory x Cost per unit
= (71-55) x $       4.90
= $          78
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