Jamal uses the AVCO system to value his inventory.

Question

He provides the following information:

March 1 no opening inventory

         6 60 units were purchased at $120 per unit

        17 100 units were purchased at $116 per unit

        23 110 units were sold for $150 per unit

What was the cost of sales for March? A $5875 B $12 925 C $13 000 D $18 800

Answer 1

k so i think the above no. are like this

Opening Inventory ..........................Nil

Units Purchased March 6 ................. 60 at $120 per unit
units purchased March 17 ................100 at $116 per unit
Units sold March 23..........................110 at $150 per unit

Average cost = Total cost of units available for sale / no. of units available for sale

 

Opening Inventory cost.............................$0

Units purchased March 6...........(60*120) = $7,200
Units Purchased cost March ......(100*116) = $11,600
Total costs of units available for sale            =  $18,800
No. of units available for sale 160

Average cost = $18,800/160 = $117.5
Multiplying the average cost with units sold gives you $12,925 (117.5 * 110)

So the answer is B