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A company just starting its business made the following four inventory purchases in June: On June 25, the company made its first sale when a local customer purchased 500 units for $3,500. The company uses a perpetual inventory system.
-Mandy Corp. purchased inventory as follows:March 3 500 units at $18March 4 300 units at $20March 7 200 units at $22On March 5, Mandy sold 600 units for $18 each. The average unit cost to be used for the cost of goods sold on March 5, in a perpetual inventory system, is
A) $18.80.
B) $19.40.
C) $25.00.
D) $16.67.

Question

Use the following information for questions.
A company just starting its business made the following four inventory purchases in June:  On June 25, the company made its first sale when a local customer purchased 500 units for $3,500. The company uses a perpetual inventory system.
-Mandy Corp. purchased inventory as follows:March 3 500 units at $18March 4 300 units at $20March 7 200 units at $22On March 5, Mandy sold 600 units for $18 each. The average unit cost to be used for the cost of goods sold on March 5, in a perpetual inventory system, is
A) $18.80. 
B) $19.40. 
C) $25.00. 
D) $16.67.

Quizplus · Accepted Answer

Weighted average cost = (500 x $18 + 300 x $20 + 200 x $22) / (500 + 300 + 200) = $19.40Average unit cost = $19.40 - $2.00 (discount) = $18.80

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