A company just starting a business purchased three inventory items at the following prices: March 2, $150; March 7, $160; and March 15, $180. If the company sold one unit for $230 on March 10 and one unit for $250 on March 20 and uses the average cost formula in a perpetual inventory system, what is the cost of ending inventory?
A) $163.34
B) $167.50
C) $180.00
D) $250.00

Question

Quizplus · Accepted Answer

The average cost per unit is calculated as ($150 + $160 + $180) / 3 = $163.33. After selling two units, the ending inventory is one unit at the average cost of $163.33, rounded to $167.50.

A Company Just Starting a Business Purchased Three Inventory Items