City Bicycle City Bicycle , a cycling store has a beginning inventory of one bi-level touring bicycle 1, for which it paid $2,500.Suppose that during the period the store purchases bi-level touring bicycle 2 for $2,900 and bi-level touring bicycle 3 for $3,000, and that it sells one bicycle for $5,500.The three bicycles are physically identical; the store acquired them at different times as their acquisition costs changed, so only their costs differ.
Using the City Bicycle example, suppose the cycling store uses the weighted-average cost-flow assumption.The cost of goods sold is _____, and the ending inventory is _____.

Question

Quizplus · Accepted Answer

The weighted-average cost is calculated by averaging the cost of all bicycles: ($2,500 + $2,900 + $3,000) / 3 = $2,800. The cost of goods sold is $2,800, and the ending inventory is the average cost multiplied by the remaining bicycles: $2,800 * 2 = $5,600.

City Bicycle City Bicycle , a Cycling Store Has a Beginning