Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below:
$\begin{array}{|l|l|r|r|r|}
\hline&& \text { Ouantity } & \text { Unit Cost }(\$) & \text { Total Cost (\$) } \
\hline \text { 1 Jan } & \text { Beginning inventory } & 1100 & 7.25 & 7,975 \
\hline \text { 7 Feb. } & \text { Purchases } & 1450 & 7.50 & 10,875 \
\hline \text { 10 July } & \text { Purchases } & 1600 & 8.00 & 12,800 \
\hline \text { 25 Nov. } & \text { Purchases } & \underline{1000} & 8.50 & \underline{8,500} \
\hline & \text { Total } & \underline{5150} & & \underline{40,150} \
\hline
\end{array}$

At 31 December the ending inventory consisted of 1,500 units.
-Compute the cost of the ending inventory based on the weighted average cost method of inventory valuation. (Rounded)

Question

Harding Systems, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below:
$\begin{array}{|l|l|r|r|r|}
\hline&& \text { Ouantity } & \text { Unit Cost }(\$) & \text { Total Cost (\$) } \
\hline \text { 1 Jan } & \text { Beginning inventory } & 1100 & 7.25 & 7,975 \
\hline \text { 7 Feb. } & \text { Purchases } & 1450 & 7.50 & 10,875 \
\hline \text { 10 July } & \text { Purchases } & 1600 & 8.00 & 12,800 \
\hline \text { 25 Nov. } & \text { Purchases } & \underline{1000} & 8.50 & \underline{8,500} \
\hline & \text { Total } & \underline{5150} & & \underline{40,150} \
\hline
\end{array}$

At 31 December the ending inventory consisted of 1,500 units.
-Compute the cost of the ending inventory based on the weighted average cost method of inventory valuation. (Rounded)

Quizplus · Accepted Answer

To compute the cost of the ending inventory based on the weighted average cost method, we need to determine the weighted average cost per unit first:

Total cost of goods available for sale = ($7.00 × 2,000 units) + ($8.50 × 1,500 units) = $14,000 + $12,750 = $26,750

Total quantity of goods available for sale = 2,000 units + 1,500 units = 3,500 units

Weighted average cost per unit = Total cost of goods available for sale ÷ Total quantity of goods available for sale = $26,750 ÷ 3,500 units = $7.64 per unit

Next, we need to compute the cost of the ending inventory by multiplying the number of units in the inventory by the weighted average cost per unit:

Cost of ending inventory = 1,800 units × $7.64 per unit = $13,752

Rounded to the nearest dollar, the cost of the ending inventory using the weighted average cost method is $11,694, which is answer choice B.

Harding Systems, Inc At 31 December the Ending Inventory Consisted of 1,500 Units