Questions: A company has a beginning inventory of 60,000 and purchases during the year of 16 consisted of 2,000 units and 8,000 units were purchased during the year. 4,080 units cost of the ending inventory using the average-cost method will be: 130,240 220,000 89,760 309,760

A company has a beginning inventory of 60,000 and purchases during the year of 16 consisted of 2,000 units and 8,000 units were purchased during the year. 4,080 units cost of the ending inventory using the average-cost method will be: 130,240 220,000 89,760 309,760

Transcript text: A company has a beginning inventory of $60,000 and purchases during the year of $16 consisted of 2,000 units and 8,000 units were purchased during the year. 4,080 units cost of the ending inventory using the average-cost method will be: $130,240 $220,000 $89,760 $309,760

Solution

Solution Steps

To solve this problem, we need to calculate the cost of the ending inventory using the average-cost method. The average-cost method involves calculating the average cost per unit of inventory and then multiplying this average cost by the number of units in the ending inventory.

Calculate the total cost of the beginning inventory and purchases.
Calculate the total number of units available for sale.
Compute the average cost per unit.
Multiply the average cost per unit by the number of units in the ending inventory to get the cost of the ending inventory.

Step 1: Calculate Total Cost of Inventory

The total cost of inventory available for sale is given by the sum of the beginning inventory cost and the purchases cost: \[ \text{Total Cost} = 60000 + 16 = 60016 \]

Step 2: Calculate Total Units Available for Sale

The total number of units available for sale is the sum of the beginning inventory units and the units purchased: \[ \text{Total Units} = 2000 + 8000 = 10000 \]

Step 3: Calculate Average Cost per Unit

The average cost per unit is calculated by dividing the total cost by the total units available for sale: \[ \text{Average Cost per Unit} = \frac{60016}{10000} = 6.0016 \]

Step 4: Calculate Ending Inventory Units

The number of units in the ending inventory is the total units available for sale minus the units sold: \[ \text{Ending Inventory Units} = 10000 - 4080 = 5920 \]

Step 5: Calculate Cost of Ending Inventory

The cost of the ending inventory is calculated by multiplying the average cost per unit by the number of ending inventory units: \[ \text{Ending Inventory Cost} = 5920 \times 6.0016 = 35529.472 \]