Maxim Corp. has provided the following information about one of its products: $\begin{array}{clrr}\text { Date }&\text { Transaction } &\text { Number of Units }&\text { Cost per Unit }\\hline
1 / 1 & \text { Beginning Inventory } & 200 & \$ 140 \
6 / 5 & \text { Purchase } & 400 & \$ 160 \
11 / 10 & \text { Purchase } & 100 & \$ 200
\end{array}$ During the year, Maxim sold 400 units. What is cost of goods sold using the average cost method?
A) $48,000.
B) $64,000.
C)$50,000.
D)$62,000.

Question

Quizplus · Accepted Answer

To calculate the cost of goods sold using the average cost method, first find the average cost per unit: Total cost of inventory = (200 units * $140) + (400 units * $160) + (100 units * $200) = $28,000 + $64,000 + $20,000 = $112,000. Total units = 200 + 400 + 100 = 700 units. Average cost per unit = $112,000 / 700 units = $160. Cost of goods sold = 400 units * $160 = $64,000.

Maxim Corp During the Year, Maxim Sold 400 Units