A company purchased 130 units for $20 each on January 31. It purchased 190 units for $25 each on February 28. It sold 190 units for $60 each from March 1 through December 31. If the company uses the weighted-average inventory costing method, calculate the amount of Cost of Goods Sold on the income statement for the year ending December 31. (Assume the company uses the perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

To use the weighted-average inventory costing method, we need to calculate the weighted-average cost per unit first.

Weighted-average cost per unit = (total cost of units purchased) / (total units purchased)
= [(130 units x $20) + (190 units x $25)] / (130 + 190)
= $4,540 / 320
= $14.19 per unit

Next, we can calculate the cost of goods sold (COGS) using the formula:

COGS = (number of units sold) x (weighted-average cost per unit)
= 190 units x $14.19 per unit 
= $2,695.10

Therefore, the answer is B, $4,364, which is the closest to the calculated COGS of $2,695.10.

A Company Purchased 130 Units for $20 Each on January