Question

umassd.umassonline.net Take Test: Final Exam - ACT 211-7101: Pe QuickLaunch - my Mass UM Dartmouth Remaining Time: 2 hours, 47 minutes, 25 seconds. Question Completion Status QUESTION 35 FIFO VALUATION PROBLEM Kinney Company uses a periodic inventory system. At the end of the annual accounting period, December 31, 2016, the accounting records provide the following information for product Date Description Units Unit Cost Inventory Value 01/01/2016 Beginning Inventory 3,000 03/21/2016 Purchase 2,500 08/15/2016 Purchase 4,000 $8 During 2016, the company sold 5,000 units of product A for $20 each. 035. Using the WEIGHTED AVERAGE inventory costing method cost of goods sold (COGS) is closet to. CA $30,000 B. $32,000 C.$35,500 D.539,000 E $40,000

Answer 1

Kinney Company

Weighted average inventory costing method:

Average cost = (opening inventory cost + Purchases) / Total inventory units

= (3,000 units × 6 per unit) + (2,500 units × 7 per unit) + (4,000 units × 8 per unit) / (3,000+2,500+4,000) units

= $ 67,500 / 9,500 units

Average cost = $ 7.10

Cost of goods sold = selling units × Average cost

= 9,500 units × 7.10

Cost of goods sold is $ 35,500

Hence Option "C" is correct.