Use this inventory information for the month of June to answer the following questions. Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?
A) $12,040
B) $6,420
C) $10,380
D) $5,620

Question

Use this inventory information for the month of June to answer the following questions.  Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?
A) $12,040 
B) $6,420 
C) $10,380 
D) $5,620

Quizplus · Accepted Answer

To calculate cost of goods sold using the average-cost method, we need to first calculate the average cost per unit by dividing the total cost of goods available for sale by the total number of units available for sale.

Average cost per unit:
= (Beginning inventory + Purchases) / (Beginning inventory units + Purchases units)
= ($1,170 + $9,480) / (110 + 810)
= $10.68

Using the average cost per unit, we can now calculate cost of goods sold:

Cost of goods sold:
= Cost of goods available for sale - Ending inventory
= ($1,170 + $9,480) - ($1,620 + $3,648)
= $5,382

Therefore, the rounded cost of goods sold under the average-cost method is $10,380.

Use This Inventory Information for the Month of June to Answer