At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The average cost per unit for May is

Question

At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows:  The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The average cost per unit for May is

Quizplus · Accepted Answer

First, calculate the cost of inventory purchased during May:

- 400 units at $6 = $2,400
- 300 units at $8 = $2,400
- 500 units at $9 = $4,500

Total cost of inventory purchased = $9,300

Next, calculate the total cost of all inventory (beginning inventory + purchases):

- 200 units at $7 = $1,400
- $9,300 (from above) = $10,700

Total units of inventory = 1,100

Average cost per unit = Total cost of inventory / Total units of inventory

= $10,700 / 1,100

= $9.73

Therefore, the closest answer choice is $7.375 (rounded to the nearest cent).

At May 1, 2015, Kibbee Company Had Beginning Inventory Consisting