The average cost of AD computer modems on 30 March, as per the stock card, is $21.06. If 200 modems are sold at $24.00 each, what is the cost of the modems charged to the income statement, assuming the weighted average method of costing is used?
A) $4000
B) $4800
C) $4212
D) $3800

Question

Quizplus · Accepted Answer

We can calculate the weighted average cost per unit using the following formula:

Weighted average cost per unit = Total cost of inventory / Total number of units

Total cost of inventory = Average cost per unit * Number of units in beginning inventory 
+ Cost of units purchased during the period

= $21.06 * (200 - 0) + $24.00 * 200 
= $4212.00

Therefore, the cost of the modems charged to the income statement is $4212.

The Average Cost of AD Computer Modems on 30 March