Koontz Company uses the perpetual inventory method. On January 1, Year 1, the company's first day of operations, Koontz purchased 400 units of inventory that cost $7.50 each. On January 10, Year 1, the company purchased an additional 600 units of inventory that cost $9.00 each. If Koontz uses a weighted average cost flow method and sells 550 units of inventory, the amount of inventory appearing on balance sheet following the sale will be approximately:
A) $3,780.
B) $4,738.
C) $3,080.
D) $3,713.

Question

Quizplus · Accepted Answer

400 units + 600 units - 550 units sold = 450 units in ending inventory; [(400 × $7.50) + (600 × $9.00)] ÷ 1,000 = $8.40 per unit;
450 units × $8.40 = $3,780

Koontz Company Uses the Perpetual Inventory Method