At May 1, 2011, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $€ 3.50$. During May, the company purchased inventory as follows:

200 units at $€ 3.50$
300 units at $€ 4.00$

The company sold 500 units during the month for $€ 6$ per unit. Deitrich uses the average cost method. The value of Deitrich's inventory at May 31, 2011 is

Question

At May 1, 2011, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $€ 3.50$. During May, the company purchased inventory as follows:

200 units at $€ 3.50$
300 units at $€ 4.00$

The company sold 500 units during the month for $€ 6$ per unit. Deitrich uses the average cost method. The value of Deitrich's inventory at May 31, 2011 is

Quizplus · Accepted Answer

The average cost per unit is calculated by dividing the total cost of inventory by the total number of units: $(100 \times €3.50 + 200 \times €3.50 + 300 \times €4.00) / 600 = €3.83$. The ending inventory is 100 units (600 units available - 500 units sold), so the value is $100 \times €3.83 = €383$, rounded to €375.

At May 1, 2011, Deitrich Company Had Beginning Inventory Consisting €3.50€ 3.50€3.50

At May 1, 2011, Deitrich Company Had Beginning Inventory Consisting $€ 3.50$