Question

Shown below is the activity for one of the products of Random Creations:

January 1 balance, 80 units @ $50 $4,000

Purchases:

January 18: 40 units @ $51

January 28: 40 units @ 52

Sales:

January 12: 30 units

January 22: 30 units

January 31: 45 units

Require: Calculate the ending inventory and COGS, using Average Cost under the perpetual inventory system.

**I specifically don't know how to calculate what the average costs would be that you'd multiply to the units under the perpetual inventory system of average cost. Please show work on how to get those average costs as well, thanks!

Answer 1

Answer- Cost of ending inventory =$2808.

Cost of goods sold= $5311

Explanation-

AVERAGE COST METHOD
	Goods purchased		Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Jan-01						80	50	4000
Jan-12			30	50	1500	50	50	2500
Jan-18	40	51				50	50	2500
						40	51	2040
Average cost						90	50.44	4540
Jan-22			30	50.44	1513	60	50.44	3026
Jan-28	40	52				60	50.44	3026
						40	52	2080
Average cost						100	51.06	5106
Jan-31			45	51.06	2298	55	51.06	2808
Totals			105		5311	55		2808