The following lots of a particular commodity were available for sale during the year: 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 according to the average cost method?
A) $655
B) $620
C) $690
D) $659

Question

The following lots of a particular commodity were available for sale during the year:  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 according to the average cost method?
A) $655 
B) $620 
C) $690 
D) $659

Quizplus · Accepted Answer

To calculate the inventory value using the average cost method, we need to find the weighted average cost per unit first.

Total cost of purchases = 11ea8f91_7cb0_4d5e_b161_230103e73905_TB2085_00_TB2085_00_TB2085_00 = $9,800 
Total units purchased = 300 
Weighted average cost per unit = Total cost of purchases / Total units purchased 
= $9,800 / 300 
= $32.67

Now, we can calculate the inventory value as follows: 
Inventory value = (20 units * $32.67 per unit) 
= $653.40

Rounding this to the nearest dollar gives us the final answer of $659. Hence, the correct choice is D.

The Following Lots of a Particular Commodity Were Available for Sale