Orange-Aide Company has the following inventory data: $$\begin{array} { r l r r }
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & { 440 }\&&& { \$ 4,180 }
\end{array}$$ A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the average cost method, the value of ending inventory is
A)$1,070
B)$1,045 c $1,050
D $1,100

Question

Orange-Aide Company has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & { 440 }\&&& { \$ 4,180 }
\end{array}$$ A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the average cost method, the value of ending inventory is
A)$1,070
B)$1,045 c $1,050
D $1,100

Quizplus · Accepted Answer

The average cost per unit is calculated as total cost divided by total units: $4,180 / 200 units = $20.90 per unit. The ending inventory of 50 units is valued at 50 units * $20.90 = $1,045.

Orange-Aide Company Has the Following Inventory Data A Physical Count of Merchandise Inventory on July 30 Reveals