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Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each.During the period,the company purchased inventory items as follows
Glasgow sold 220 units after purchase 3 for $17.00 each.

-Glasgow's ending inventory under weighted average would be approximately:
A)$2,361.
B)$2,340.
C)$1,980.
D)$1,998.

Question

Use the following information for questions
Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each.During the period,the company purchased inventory items as follows
Glasgow sold 220 units after purchase 3 for $17.00 each.
 
-Glasgow's ending inventory under weighted average would be approximately:
A)$2,361. 
B)$2,340. 
C)$1,980. 
D)$1,998.

Quizplus · Accepted Answer

Using the weighted average method, we need to calculate the cost per unit for all the inventory purchased during the period.

Cost of beginning inventory = 80 units x $7.50 = $600

Cost of inventory purchased:

200 units x $8.00 = $1,600 
120 units x $9.00 = $1,080 
100 units x $10.00 = $1,000

Total cost of inventory purchased = $3,680

Total units available for sale = Beginning inventory + Inventory purchased = 80 + 200 + 120 + 100 = 500 units

Weighted average cost per unit = Total cost of inventory available ÷ Total units available = $4,280 ÷ 500 = $8.56 per unit

Cost of goods sold = 220 units x $8.56 = $1,883.20

Ending inventory = 80 units + 200 units + 120 units + 100 units - 220 units = 280 units

Value of ending inventory = 280 units x $8.56 = $2,396.80

Therefore, the best choice is B) $2,340 because it is the closest to the calculated value of $2,396.80.

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