Use the following information for questions:
A company had the following inventory activity during January: $\begin{array}{lrrr}&\text { Units}&\text { Unit Cost }&\text {Total Cost }\\hline
\text { Beginning inventory } & 800 & \$ 10.00 & \$ 8,000 \
\text { Purchase: January } 5 & 1,400 & 11.00 & 15,400 \
\text { Sale: January } 8 & (1,500) & & \
\text { Purchase: January 13 } & 900 & 10.50 & 9,450 \
\text { Sales: January } 24 & (900) & &
\end{array}$
-If the company is using a perpetual system and the moving average costing assumption, what is the cost of goods sold closest to?
A)$24,380
B)$24,840
C)$25,459
D)$25,631

Question

Quizplus · Accepted Answer

Under the moving average costing method in a perpetual system, the cost of goods sold (COGS) is calculated by averaging the cost of inventory each time a purchase is made. Here's the calculation:1. Beginning inventory: 800 units at $10.00 each = $8,000.2. Purchase on January 5: 1,400 units at $11.00 each = $15,400. New average cost = ($8,000 + $15,400) / (800 + 1,400) = $23,400 / 2,200 = $10.6364 per unit.3. Sale on January 8: 1,500 units. COGS = 1,500 units * $10.6364 = $15,954.60.4. Remaining inventory after sale: 700 units at $10.6364 each = $7,445.48.5. Purchase on January 13: 900 units at $10.50 each = $9,450. New average cost = ($7,445.48 + $9,450) / (700 + 900) = $16,895.48 / 1,600 = $10.559675 per unit.6. Sale on January 24: 900 units. COGS = 900 units * $10.559675 = $9,503.71.Total COGS = $15,954.60 (from the first sale) + $9,503.71 (from the second sale) = $25,458.31, which rounds to $25,459.

Use the Following Information for Questions: a Company Had the Following

Use the Following Information for Questions:
a Company Had the Following