A company uses the weighted-average method of inventory valuation under a periodic inventory system. The company began the year with a zero inventory balance. They had the following transactions during the year.
1) Purchased 65 units at $7 per unit
2) Purchased 130 units at $7 per unit
3) Sold 110 units at $11 per unit
4) Purchased 55 units at $8 per unit
5) Sold 110 units at $13.25 per unit
At the end of the year, the company counted the inventory and found 30 units remaining. Calculate the cost of goods sold for the year. (Round the unit costs to two decimal places and total costs to the nearest dollar.)

Question

A company uses the weighted-average method of inventory valuation under a periodic inventory system. The company began the year with a zero inventory balance. They had the following transactions during the year.
 1) Purchased 65 units at $7 per unit
2) Purchased 130 units at $7 per unit
3) Sold 110 units at $11 per unit
4) Purchased 55 units at $8 per unit
5) Sold 110 units at $13.25 per unit
At the end of the year, the company counted the inventory and found 30 units remaining. Calculate the cost of goods sold for the year. (Round the unit costs to two decimal places and total costs to the nearest dollar.)

Quizplus · Accepted Answer

To calculate the cost of goods sold using weighted-average method, we need to find the weighted-average cost per unit.

Step 1: Calculate the total cost of goods available for sale

65 units x $7/unit = $455

130 units x $7/unit = $910

55 units x $8/unit = $440

Total cost of goods available for sale = $1,805

Step 2: Calculate the total units available for sale

65 units + 130 units + 55 units = 250 units

Step 3: Calculate the weighted-average cost per unit

$1,805 ÷ 250 units = $7.22 per unit (rounded to two decimal places)

Step 4: Calculate the cost of goods sold

110 units sold x $7.22 per unit = $794.20

Total cost of goods sold = $1,588.40 (rounded to the nearest dollar)

Therefore, the correct answer is choice D, $1,588.

A Company Uses the Weighted-Average Method of Inventory Valuation Under