Alphabet Company,which uses the periodic inventory method,purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February,it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A,D,E,H,J and N in October.There were no additional purchases or sales during the remainder of the year. If Alphabet Company uses the weighted average method,what is the cost of its ending inventory? (Round the per unit cost to two decimal places and then round your answer to the nearest whole dollar. )

Question

Quizplus · Accepted Answer

To calculate the weighted average cost per letter, we need to first find the total cost and total number of letters purchased:

- Total cost of A-G: 7 letters x $4 = $28
- Total cost of H-L: 5 letters x $6 = $30
- Total cost of M-R: 6 letters x $7 = $42

- Total number of letters purchased: 7 + 5 + 6 = 18 letters

Therefore, the weighted average cost per letter is:

($28 + $30 + $42) / 18 = $2.89

To calculate the cost of ending inventory, we need to multiply the number of letters remaining by the weighted average cost:

- Cost of ending inventory: 6 letters x $2.89 = $17.34

Rounding to the nearest whole dollar, the cost of ending inventory is $17. Therefore, the best choice is C.

Alphabet Company,which Uses the Periodic Inventory Method,purchases Different Letters for Resale.Alphabet