A business has opening inventory of 200 units which cost £5.00 per unit and during the year it bought an additional 300 units at £6.00 and 400 units at £7.00. It sold 800 units during the same period.
-the cost of sales using the weighted average cost basis of inventory valuation would be:

Question

A business has opening inventory of 200 units which cost £5.00 per unit and during the year it bought an additional 300 units at £6.00 and 400 units at £7.00. It sold 800 units during the same period. 
-the cost of sales using the weighted average cost basis of inventory valuation would be:

Quizplus · Accepted Answer

To calculate the weighted average cost basis of inventory valuation, we need to divide the total cost of inventory by the total number of units.

Total cost of inventory = (200 units x £5.00) + (300 units x £6.00) + (400 units x £7.00) = £2000 + £1800 + £2800 = £6600

Total number of units = 200 + 300 + 400 = 900 units

Weighted average cost per unit = £6600 / 900 units = £7.33 per unit

Cost of goods sold = 800 units x £7.33 per unit = £5864

Therefore, the closest option is B) £4977.

A Business Has Opening Inventory of 200 Units Which Cost