Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 360 units that cost $65 each. During the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. Chess Top also sold 900 units during the month. Using the average cost method, what is the amount of ending inventory?
A) $18,900.
B) $60,786.
C) $60,120.
D) $18,236.

Question

Quizplus · Accepted Answer

The average cost per unit is calculated as total cost of goods available for sale divided by total units available for sale: [(360 units * $65) + (540 units * $68) + (270 units * $70)] / (360 + 540 + 270) = $67.98 per unit. Ending inventory is 270 units * $67.98 = $18,236.

Chess Top Uses the Periodic Inventory System