At May 1, 2022, Mark 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
500 units at $9
The company sold 500 units during the month for $12 per unit. Mark uses a periodic inventory system and the average cost method. The cost of Mark's inventory. To the nearest dollar, at May 31, 2022 is

Question

Quizplus · Accepted Answer

To calculate the cost of ending inventory using the average cost method, we need to find the weighted average unit cost.

Total Cost of Beginning Inventory = 200 x $7 = $1,400
Total Cost of Purchases = (800 x $7) + (500 x $9) = $8,100
Total Units Available for Sale = 200 + 800 + 500 = 1,500

Weighted Average Unit Cost = Total Cost of Beginning Inventory + Total Cost of Purchases / Total Units Available for Sale
= ($1,400 + $8,100) / 1,500 = $6 per unit

Cost of Goods Sold = 500 x $6 = $3,000
Ending Inventory = (1,000 x $6) = $6,000

Therefore, the closest answer is B: $7,667.

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