At May 1, 2022, Bibby Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 800 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Bibby uses periodic inventory system and the average cost method. The average cost per unit for May is

Question

Quizplus · Accepted Answer

To calculate the average cost per unit, we need to first determine the total cost of inventory purchased during May.

Total cost = (800 units x $7 per unit) + (600 units x $8 per unit) 
Total cost = $5,600 + $4,800 
Total cost = $10,400

Next, we need to determine the total number of units purchased during May:

Total units purchased = 800 units + 600 units
Total units purchased = 1,400 units

To find the average cost per unit, we divide the total cost by the total number of units:

Average cost per unit = Total cost / Total units purchased 
Average cost per unit = $10,400 / 1,400 units 
Average cost per unit = $7.375

Therefore, the average cost per unit for May is $7.375, which is closest to choice B.

At May 1, 2022, Bibby Company Had Beginning Inventory Consisting