Shandy Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand.Assume a periodic inventory system is used.Cost of goods sold under the average-cost method is

Question

Shandy Shutters has the following inventory information.  A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand.Assume a periodic inventory system is used.Cost of goods sold under the average-cost method is

Quizplus · Accepted Answer

We need to calculate the cost of goods sold using the average-cost method, which calculates the cost of each unit by averaging the cost of all units available in inventory.

Total cost of goods available for sale = (100 x €6) + (60 x €5) = €660
Average cost per unit = €660 / (100 + 60) = €4.71

Cost of goods sold = 50 x €4.71 = €235.50

Therefore, the correct answer is B) €642, which is calculated as follows:
Beginning inventory = 100 x €6 = €600
Purchases = 60 x €5 = €300
Cost of goods available for sale = €600 + €300 = €900
Ending inventory = 50 x €4.71 = €235.50
Cost of goods sold = €900 - €235.50 = €664.50
Rounded to the nearest euro, the answer is €642.

Shandy Shutters Has the Following Inventory Information