Rubric, Inc. provided the following inventory transaction summary for May: 5/1 Purchased 200 units @ $3.00 per unit
5/15 Sold 40 units
5/21 Purchased 300 units @ $5.00 per unit 5/31 Purchased 40 units @ $10.00 per unit
In addition, it has been determined that Rubric's inventory at the beginning of the month was $400.00 200 units). What was Rubric's cost per unit at the end of May, using the moving average method?
A) $3.00
B) $2.00
C) $4.00
D) $6.00

Question

Quizplus · Accepted Answer

To calculate the cost per unit at the end of May using the moving average method, we first determine the total cost of inventory and the total units available before each transaction, and then calculate the new average cost after each purchase.1. Beginning inventory: 200 units @ $2.00 each (given $400 total cost) = $4002. Purchase on 5/1: 200 units @ $3.00 each = $600   - New total: 400 units, New total cost: $1000   - New average cost per unit: $1000 / 400 = $2.503. Sale on 5/15: 40 units sold, does not affect the cost per unit, only reduces the quantity.   - Remaining units: 360, Total cost remains $1000   - Average cost per unit remains $2.504. Purchase on 5/21: 300 units @ $5.00 each = $1500   - New total: 660 units, New total cost: $2500   - New average cost per unit: $2500 / 660 ≈ $3.795. Purchase on 5/31: 40 units @ $10.00 each = $400   - New total: 700 units, New total cost: $2900   - New average cost per unit: $2900 / 700 = $4.14Rounding to the nearest whole dollar, the cost per unit at the end of May is approximately $4.00, making option C correct.