To calculate the closing inventory using the Weighted Average Method, you will need to determine the weighted average cost per unit and then multiply it by the number of units remaining in the inventory. Here's how you can do it:
1. Calculate the total cost of purchases:
- On 10th January: 1,000 units × Ksh. 28.00 = Ksh. 28,000
- On 14th February: 1,500 units × Ksh. 28.20 = Ksh. 42,300
- On 17th March: 3,000 units × Ksh. 28.40 = Ksh. 85,200
- On 18th June: 2,500 units × Ksh. 28.55 = Ksh. 71,375
Total cost of purchases = Ksh. 28,000 + Ksh. 42,300 + Ksh. 85,200 + Ksh. 71,375 = Ksh. 226,875
2. Calculate the total number of units purchased:
Total units purchased = 1,000 + 1,500 + 3,000 + 2,500 = 8,000 units
3. Calculate the weighted average cost per unit:
Weighted average cost per unit = Total cost of purchases ÷ Total units purchased
Weighted average cost per unit = Ksh. 226,875 ÷ 8,000 = Ksh. 28.36 (rounded to two decimal places)
4. Calculate the closing inventory:
Number of units remaining = Total units purchased - Units sold
Number of units remaining = 8,000 - 4,200 = 3,800 units
Closing inventory = Weighted average cost per unit × Number of units remaining
Closing inventory = Ksh. 28.36 × 3,800 = Ksh. 107,968 (rounded to the nearest whole number)
Therefore, the closing inventory using the Weighted Average Method is Ksh. 107,968.