ACCA Applied Knowledge · Financial Accounting · Inventories
Opening inventory is 200 units at $5. Purchases: 400 units at $8 on 5 May. On 10 May, 300 units are sold. Using the periodic weighted average cost (average of opening inventory and purchases), what is the cost of the 300 units sold?
The cost of the 300 units sold is $2,100. Total cost of $4,200 divided by 600 units gives an average of $7 per unit, and 300 units multiplied by $7 equals $2,100.
- A$1,800Correct
- B$2,100
- C$1,500
- D$2,400
Explanation
Total cost = 200x5 + 400x8 = 1,000 + 3,200 = $4,200 for 600 units, giving $7 per unit. Cost of sales is 300 x 7 = $2,100. Check: the correct answer is $2,100, not $1,800, which is 300 x 6, a simple average of $5 and $8 miscalculated.
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