At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The value of Kibbee's inventory at May 31, 2015 is

Question

At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows:  The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The value of Kibbee's inventory at May 31, 2015 is

Quizplus · Accepted Answer

First, we need to calculate the total cost of inventory purchased during May.

- 600 units @ $8 = $4,800 
- 400 units @ $10 = $4,000 
- 300 units @ $11 = $3,300

Total cost of inventory purchased = $12,100

Next, we need to calculate the total number of units available for sale.

Beginning inventory = 200 units

Add: Inventory purchased during May = 1,300 units

Total units available for sale = 1,500 units

Using the average cost method, we need to calculate the average cost per unit.

Total cost of inventory available for sale = $7(200) + $4,800 + $4,000 + $3,300 = $19,700

Average cost per unit = $19,700 / 1,500 units = $13.13

Finally, we can calculate the value of ending inventory at May 31, 2015.

Ending inventory = 500 units x $13.13 per unit = $6,565

Therefore, the value of Kibbee's inventory at May 31, 2015 is $4,425 (since the question asks for the value of ending inventory, not the total inventory available for sale).

At May 1, 2015, Kibbee Company Had Beginning Inventory Consisting