Alpha Company uses a periodic inventory system.The company bought 75 units of inventory for $4 each and 25 units of inventory for $5 each.Alpha's weighted average cost per unit is:
A) $4.25.
B) $4.50.
C) $4.00.
D) $5.00.

Question

Quizplus · Accepted Answer

To calculate weighted average cost per unit, we need to add the total cost of inventory and then divide it by the total number of units purchased.

Total cost of 75 units of inventory @ $4 each = 75 x $4 = $300
Total cost of 25 units of inventory @ $5 each = 25 x $5 = $125
Total cost of 100 units of inventory = $300 + $125 = $425

Weighted average cost per unit = Total cost of inventory / Total units of inventory
= $425 / 100 units
= $4.25

Therefore, the best choice is A) $4.25 as it represents the weighted average cost per unit for Alpha Company's inventory.

Alpha Company Uses a Periodic Inventory System