Acme sells 150 units during this quarter.Acme uses the weighted average method.What is its cost of goods sold for the quarter?

Question

Quizplus · Accepted Answer

To compute the cost of goods sold using the weighted average method, we need to compute the weighted average unit cost first.

Assuming Acme had the following purchases during the quarter:

- 100 units at $4 each 
- 50 units at $6 each

To compute the weighted average unit cost:

Weighted Avg. Unit Cost = (Total Cost of Goods Purchased) / (Total Units Purchased)

Total Cost of Goods Purchased = (100 units x $4/unit) + (50 units x $6/unit) = $400 + $300 = $700

Total Units Purchased = 100 + 50 = 150

Weighted Avg. Unit Cost = $700 / 150 = $4.67/unit

Now, we can compute the cost of goods sold:

Cost of Goods Sold = (Units Sold) x (Weighted Avg. Unit Cost)

Cost of Goods Sold = 150 x $4.67 = $700.50 ≈ $705

Therefore, the best choice is B.

Acme Sells 150 Units During This Quarter