The Xu Corporation uses a periodic inventory system.The company has a beginning inventory of 300 units at $5 each on January 1.Xu purchases 500 units at $4 each in February and 200 units at $6 each in March.There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.Xu sells 150 units during the quarter.If Xu uses the weighted average method,what is its cost of goods sold?
A) $600
B) $705
C) $750
D) $900

Question

Quizplus · Accepted Answer

To calculate cost of goods sold using the weighted average method, we need to first calculate the weighted average cost per unit. Here's how we do it:

Weighted Average Cost Per Unit = (Total Cost of Goods Available for Sale) / (Total Units Available for Sale)
= [(300 x $5) + (500 x $4) + (200 x $6)] / (300 + 500 + 200)
= ($1,500 + $2,000 + $1,200) / 1,000
= $4.70 per unit (rounded to two decimal places).

Now, to calculate the cost of goods sold for the 150 units sold during the quarter, we simply multiply the weighted average cost per unit by the number of units sold:

Cost of Goods Sold = (Number of Units Sold) x (Weighted Average Cost Per Unit)
= 150 x $4.70
= $705.

Therefore, the answer is B, $705.

The Xu Corporation Uses a Periodic Inventory System