Langer Company has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory (round all calculations to nearest dollar) under the moving-average cost method?

Question

Langer Company has the following inventory information.  Assuming that a perpetual inventory system is used, what is the ending inventory (round all calculations to nearest dollar) under the moving-average cost method?

Quizplus · Accepted Answer

Using the moving-average cost method, we calculate the weighted average cost per unit by dividing the total cost of goods available for sale by the total units available for sale.

Weighted average cost per unit = Total cost of goods available for sale / Total units available for sale
= ($1,510 + $1,890 + $2,070) / (70 + 110 + 90)
= $5,470 / 270
= $20.26

To calculate the ending inventory, we multiply the number of units in ending inventory by the weighted average cost per unit.

Ending inventory = Units in ending inventory x Weighted average cost per unit

For Langer Company, the units in ending inventory is 148.

Ending inventory = 148 x $20.26 = $2,988 (rounded to nearest dollar)

Therefore, the best choice is C.

Langer Company Has the Following Inventory Information