The Singh Computer Shop begins operations on June 1 and uses a periodic inventory system. During June, the company had the following purchases and sales for its Model 10 Fastback Computer System: On June 30 an inventory count showed there were 8 units on hand.
-Using the average cost formula, the amount allocated to the ending inventory on June 30 is
A) $19,323.
B) $12,077.
C) $20,800.
D) $18,400.

Question

The Singh Computer Shop begins operations on June 1 and uses a periodic inventory system. During June, the company had the following purchases and sales for its Model 10 Fastback Computer System:  On June 30 an inventory count showed there were 8 units on hand.
-Using the average cost formula, the amount allocated to the ending inventory on June 30 is
A) $19,323. 
B) $12,077. 
C) $20,800. 
D) $18,400.

Quizplus · Accepted Answer

The average cost formula is:Average cost = Total cost of goods available for sale / Total units available for saleIn this case, the total cost of goods available for sale is $31,400 and the total units available for sale are 1,600. Therefore, the average cost is $19.625.The ending inventory is 1,000 units. Therefore, the amount allocated to the ending inventory on June 30 is $19,625 x 1,000 = $19,625.

The Singh Computer Shop Begins Operations on June 1 and Uses