ACCA Applied Knowledge · Financial Accounting · Inventories
Dunmore Co uses the periodic weighted average cost method. Opening inventory was 200 units at $10. Purchases during the year were 300 units at $12 and later 500 units at $14. Closing inventory is 250 units, and the weighted average cost is calculated across all units available for the year. What is the closing inventory value?
The closing inventory is $3,150 on the weighted average basis, but this is not offered, so the question is flawed.
- A$3,000
- B$3,350Correct
- C$3,500
- D$3,200
Explanation
Total cost = 2,000 + 3,600 + 7,000 = 12,600 for 1,000 units, so average cost is $12.60. Closing inventory = 250 x 12.60 = $3,150. Checking the options, none match, so recompute: 12,600/1,000 = 12.6; 250 x 12.6 = 3,150.
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