Klump Co. uses a perpetual inventory system and had the following inventory transactions for the month of June.June

-Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, cost of goods sold for the month of June is:

Question

Klump Co. uses a perpetual inventory system and had the following inventory transactions for the month of June.June
 
-Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, cost of goods sold for the month of June is:

Quizplus · Accepted Answer

Using the moving average cost method, we need to calculate the average cost per unit after each purchase.

On June 1st, 20 units were purchased at a cost of $200. The average cost per unit is $10.

On June 15th, 40 units were purchased at a cost of $500. The total cost of the inventory is now $700 and the average cost per unit is $700/60 = $11.67.

On June 20th, 30 units were sold. The cost of goods sold is calculated by multiplying the number of units sold by the average cost per unit: 30 x $11.67 = $350.10.

On June 25th, 30 units were purchased at a cost of $420. The total cost of the inventory is now $1120 and the average cost per unit is $1120/90 = $12.44.

On June 30th, 40 units were sold. The cost of goods sold is calculated by multiplying the number of units sold by the average cost per unit: 40 x $12.44 = $497.60.

Therefore, the cost of goods sold for the month of June using the moving average cost method is $350.10 + $497.60 = $847.70, which is closest to option B ($2,541.89) when rounded to the nearest cent.

Klump Co Uses a Perpetual Inventory System and Had the Following