Question

At May 1, 2022, Swifty Corporation had beginning inventory consisting of 230 units with a unit cost of $5. During May, the company purchased inventory as follows: .460 units at $5 .680 units at $6 The company sold 1140 units during the month for $9 per unit. Swifty Corporation uses the average cost method. The value of Swifty Corporation's inventory at May 31, 2022 is (Round average cost per unit to 2 decimal places, s. 12.52.) $1150 $1265. $7530 O $1380 e Textbook and Media Save for Later Attempts: 0 of 2 used Submit Answer o RI . 3 2 lip 5 6 IRI LILY LUULOLE F| G|HIKILL ru MU11_1 B N

Answer 1

Given, Beginning Inventory is 230 units @ $5 per unit

During the may purchase of inventories made as follows

460 units @ $5

680 units @ $6

Sold units is 1140 units @ $9

The formula for Closing Inventory using Average Cost Method is as follows

1) Average Cost per Unit = Cost of Production / Total Production Units

= [(230 * $5) + (460 * $5) + (680 * $6) / 230 + 460 + 680

= [ $1,150 +$ 2,300 + $4,080) / 1,370

= $7,530 / 1,370

Average Cost per Unit = $5.49

Total Cost of Inventory at the end of May 31, 2022 = Ending Inventory * Average Cost per unit

= (1,370 - 1,140) * $5.49)

= 230 * $5.49

Total Cost of Inventory at the end of May 31, 2022 = $1,264.16 is approximately $1,265

Hence Option $1,265 is correct