Readers.com uses a perpetual inventory system. If Readers.com uses the moving average method, how much is ending inventory on February 28?

Question

Readers.com uses a perpetual inventory system.  If Readers.com uses the moving average method, how much is ending inventory on February 28?

Quizplus · Accepted Answer

To calculate the ending inventory using the moving average method, we need to divide the total cost of goods available for sale by the total number of units available for sale to get the average cost per unit. Then, we multiply the average cost per unit by the number of units in ending inventory.

Total cost of goods available for sale = beginning inventory + purchases = $600 + $1,200 = $1,800
Total number of units available for sale = beginning inventory + purchases = 200 + 400 = 600
Average cost per unit = total cost of goods available for sale / total number of units available for sale = $1,800 / 600 = $3

Ending inventory = number of units in ending inventory x average cost per unit
Ending inventory = 104 x $3
Ending inventory = $312

Therefore, the best choice is C, $312.

ReadersCom Uses a Perpetual Inventory System