Fairy Gardens Ltd uses a periodic inventory system with the weighted average method of cost assignment. The following data are available.
$$\begin{array} { l l r c l }
& \text { Date } & \underline { \text { Units } } & \underline { \text { Unit } } \underline { \text { Cost } } & \frac { \text { Total } } { \text { Cost } } \
\
\text { Beginning inventory } & \text { Jan 1 } & 500 & \$ 10 & \$ 5000 \
\text { Purchase } & \text { Mar } 15 & 1500 & \$ 12 & \$ 18000 \
\text { Purchase } & \text { June 8 } & 2000 & \$ 13 & \$ 26000 \
\text { Ending inventory } & \text { Dec } 31 & 1000 & &
\end{array}$$
The cost of the ending inventory to the nearest dollar is:

Question

Fairy Gardens Ltd uses a periodic inventory system with the weighted average method of cost assignment. The following data are available.
$$\begin{array} { l l r c l } 
& \text { Date } & \underline { \text { Units } } & \underline { \text { Unit } } \underline { \text { Cost } } & \frac { \text { Total } } { \text { Cost } } \
\
\text { Beginning inventory } & \text { Jan 1 } & 500 & \$ 10 & \$ 5000 \
\text { Purchase } & \text { Mar } 15 & 1500 & \$ 12 & \$ 18000 \
\text { Purchase } & \text { June 8 } & 2000 & \$ 13 & \$ 26000 \
\text { Ending inventory } & \text { Dec } 31 & 1000 & &
\end{array}$$
The cost of the ending inventory to the nearest dollar is:

Quizplus · Accepted Answer

To find the cost of the ending inventory using the weighted average method, first calculate the total cost of goods available for sale and then divide by the total units available for sale to find the weighted average cost per unit. Finally, multiply the weighted average cost per unit by the number of units in the ending inventory.Total units available for sale = Beginning inventory + Purchases = 500 + 1500 + 2000 = 4000 unitsTotal cost of goods available for sale = \$5,000 (beginning inventory) + \$18,000 (first purchase) + \$26,000 (second purchase) = \$49,000Weighted average cost per unit = Total cost of goods available for sale / Total units available for sale = \$49,000 / 4000 units = \$12.25 per unitCost of ending inventory = Weighted average cost per unit * Ending inventory units = \$12.25 * 1000 = \$12,250

Fairy Gardens Ltd Uses a Periodic Inventory System with the Weighted