Business

Question

On January 1, 2007, Nichols Company's inventory of Item X consisted of 2,000 units that cost $8 each. During 2007 the company purchased 5,000 units of Item X at $10, each, and it sold 4,500 units. Periodic inventory procedure is used. Cost of goods sold using weighted-average cost is:

2 Answer

  • Answer:

    For the cost of goods sold, the company made around $42,435

    Explanation:

    Solve cost of goods for Jan. 1st:

    2000 units × $8

    $16,000

    Solve for cost of goods during 2007:

    5000 units × $10

    $50,000

    Use the formula for weighted-average cost:

    WAC per unit = cost of goods available for sale / units available for sale

    WAC per unit = 16,000 + 50,000 / 2000 + 5000

    WAC per unit = 66,000 / 7000

    WAC per unit = 9.42857..... I will round to a dollar value

    WAC per unit = 9.43

    For cost of goods sold:

    4,500 × 9.43 (please keep in mind 9.43 is a rounded number)

    $42,435

  • The cost of goods sold using  weighted-average cost under Periodic inventory is $42,429

    Before calculating the cost of goods sold, first we have to determine the weighted average cost per unit.

    For this following formula should be used:

    = (Opening units × cost per unit + purchased units × cost per unit) ÷ (opening units + purchased units)

    = (2,000 units × $8 + 5,000 units × $10) ÷ (2,000 units + 5,000 units)

    = ($16,000 + $50,000) ÷ (7,000 units)

    = $66,000 ÷ 7,000 units

    = $9.428

    Now the cost of goods sold using  weighted-average cost is

    = Number of units sold × average cost per unit

    = 4,500 units × $9.428

    = $42,429

    Hence, we conclude that the cost of goods sold using weighted-average cost under Periodic inventory is $42,429.

    Learn more about the cost of goods sold here: brainly.com/question/14292529

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