Perpetual inventory using weighted average

Question

Beginning inventory, purchases, and sales for WCS12 are as follows:

Date Line Item Description Value
Oct. 1 Inventory 310 units at $11
Oct. 13 Sale 190 units
Oct. 22 Purchase 380 units at $12
Oct. 29 Sale 300 units
a. Assuming a perpetual inventory system and using the weighted average method, determine the weighted average unit cost after the October 22 purchase. Round your answer to two decimal places.
fill in the blank 1 of 1$
per unit

b. Assuming a perpetual inventory system and using the weighted average method, determine the cost of goods sold on October 29. Round your "average unit cost" to two decimal places.
fill in the blank 1 of 1$

c. Assuming a perpetual inventory system and using the weighted average method, determine the inventory on October 31. Round your "average unit cost" to two decimal places.

Answer 1

To solve the problem using a perpetual inventory system and the weighted average method, let's proceed step by step for each part:

a. Calculate the weighted average unit cost after the October 22 purchase.

1. Calculate the total cost of beginning inventory:

   • Beginning Inventory: 310 units at $11
   • Cost: 310 x $11 = $3,410

2. Add the purchase on October 22:

   • Purchase: 380 units at $12
   • Cost: 380 x $12 = $4,560

3. Calculate the total units and total cost after the October 22 purchase:

   • Total units = Beginning Inventory + Purchases = 310 + 380 = 690 units
   • Total cost = Cost of Beginning Inventory + Cost of Purchase = $3,410 + $4,560 = $7,970

4. Calculate the weighted average unit cost: \[ \text{Weighted Average Cost} = \frac{\text{Total Cost}}{\text{Total Units}} = \frac{7970}{690} = 11.55 \]

Answer for a: $11.55 per unit

b. Determine the cost of goods sold on October 29.

1. Units sold on October 29: 300 units
2. Weighted average cost after the October 22 purchase (calculated in part a): $11.55
3. Calculate the cost of goods sold (COGS): \[ \text{COGS} = \text{Units Sold} \times \text{Weighted Average Cost} = 300 \times 11.55 = 3,465 \]

Answer for b: $3,465

c. Determine the inventory on October 31.

1. Calculate remaining inventory after the sales on October 29:

   • Inventory before sales on October 29 = 690 units (after October 22 purchase)
   • Units sold on October 29 = 300 units
   • Remaining inventory = 690 - 300 = 390 units

2. Weighted average cost after the October 22 purchase (remains the same until a new purchase): $11.55

3. Calculate the total inventory value on October 31: \[ \text{Inventory Value} = \text{Remaining Units} \times \text{Weighted Average Cost} = 390 \times 11.55 = 4,504.5 \]

4. Total units remaining in inventory on October 31:

   • Remaining units: 390 units

The average cost still remains $11.55.

Answer for c: $4,504.50 (the total inventory value), or to specify the unit cost, it is $11.55 per unit.

In summary:

• Part a: $11.55 per unit
• Part b: $3,465
• Part c: $4,504.50 total inventory value (390 units at $11.55 each).