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 goods sold for the current year based on the weighted average cost method of inventory valuation.

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 goods sold for the current year based on the weighted average cost method of inventory valuation.

Quizplus · Accepted Answer

The weighted average cost is calculated by dividing the total cost of goods available for sale by the total number of units available for sale. In this case, the total cost of goods available for sale is $40,150 and the total number of units available for sale is 5,150. Therefore, the weighted average cost per unit is $7.81 ($40,150 ÷ 5,150). The cost of goods sold is then calculated by multiplying the weighted average cost per unit by the number of units sold. In this case, the number of units sold is 3,650 (5,150 - 1,500). Therefore, the cost of goods sold is $28,450 ($7.81 x 3,650).

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