The firm uses the periodic system,and there are 20 units of the commodity on hand at the end of the year.What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method?
A) $655
B) $620
C) $690
D) $659

Question

Quizplus · Accepted Answer

The average cost method calculates the cost of inventory at the end of the year by dividing the total cost of goods available for sale by the total units available for sale, then multiplying the average cost per unit by the number of units on hand at the end of the year. The correct answer, D, implies this method was used to arrive at $659 as the rounded nearest dollar value for the 20 units of inventory.

The Firm Uses the Periodic System,and There Are 20 Units