Determine the total value of the inventory based on the average price method. Count Price Extensions
Beginning inventory 6 $5.65 $33.90
Purchases on 2/6 before inventory 6 $6.30 $37.80
Purchases on 2/13 before inventory 12 $6.10 $73.20
Purchases on 2/20 before inventory 6 $6.30 $37.80
Purchases on 2/27 before inventory 4 $5.80 $23.20
Ending inventory 12 units

Question

Quizplus · Accepted Answer

We need to use the average price method to calculate the total value of the inventory. 
First, we need to calculate the total cost of goods available for sale:
Beginning inventory: 6 x $5.65 = $33.90
Purchase on 2/6: 6 x $6.30 = $37.80
Purchase on 2/13: 12 x $6.10 = $73.20
Purchase on 2/20: 6 x $6.30 = $37.80
Purchase on 2/27: 4 x $5.80 = $23.20
Total cost of goods available for sale: $205.90

Next, we need to calculate the weighted average cost per unit:
(6 x $5.65) + (6 x $6.30) + (12 x $6.10) + (6 x $6.30) + (4 x $5.80) / (6 + 6 + 12 + 6 + 4) = $72.67

Finally, we can calculate the value of the ending inventory:
12 units x $72.67 = $872.04

Therefore, the total value of the inventory based on the average price method is $872.04.
The best choice is D.

Determine the Total Value of the Inventory Based on the Average