Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 4,800 units that cost $12 each. During the month, the company made two purchases: 2,000 units at $13 each and 8,000 units at $13.50 each. Checkers also sold 8,600 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month?
A) $111,370.
B) $115,800.
C) $107,900.
D) $111,800.

Question

Quizplus · Accepted Answer

The average cost per unit is calculated by dividing the total cost of goods available for sale by the total units available for sale. The total cost of goods available for sale is: (4,800 units * $12) + (2,000 units * $13) + (8,000 units * $13.50) = $57,600 + $26,000 + $108,000 = $191,600. The total units available for sale are 4,800 + 2,000 + 8,000 = 14,800 units. The average cost per unit is $191,600 / 14,800 units = $12.95 per unit. The cost of goods sold for the 8,600 units sold is 8,600 units * $12.95 = $111,370.

Checkers Uses the Periodic Inventory System