Use this inventory information for the month of March to answer the following question. $\begin{array}{rlll}
\text { Mar. } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$

Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Question

Use this inventory information for the month of March to answer the following question. $\begin{array}{rlll}
\text { Mar. } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$

Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Quizplus · Accepted Answer

Using the average-cost method, the cost of goods sold for March is calculated as follows:

Beginning inventory: 60 units x $30 = $1,800 
Purchases: (100 units x $25) + (40 units x $28) = $2,500 + $1,120 = $3,620 
Total goods available for sale: $1,800 + $3,620 = $5,420 
Ending inventory: 80 units x $27 = $2,160 
Cost of goods sold: $5,420 - $2,160 = $3,260

Rounding this amount to the nearest dollar gives us a cost of goods sold of $5,190, which is option C.

Use This Inventory Information for the Month of March to Answer