Dunbar Distribution markets CDs of numerous performing artists. At the beginning
ID: 2380955 • Letter: D
Question
Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 3,718 CDs with a unit cost of $10. During March, Dunbar made the following purchases of CDs.March 5 2,974 @ $12 March 21 7,435 @ $15 March 13 5,205 @ $13 March 26 2,974 @ $16
During March 17,844 units were sold. Dunbar uses a periodic inventory system. A- Determine cost of goods sold B- Calculate Average Cost Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 3,718 CDs with a unit cost of $10. During March, Dunbar made the following purchases of CDs.
March 5 2,974 @ $12 March 21 7,435 @ $15 March 13 5,205 @ $13 March 26 2,974 @ $16
During March 17,844 units were sold. Dunbar uses a periodic inventory system. A- Determine cost of goods sold B- Calculate Average Cost Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 3,718 CDs with a unit cost of $10. During March, Dunbar made the following purchases of CDs.
March 5 2,974 @ $12 March 21 7,435 @ $15 March 13 5,205 @ $13 March 26 2,974 @ $16
During March 17,844 units were sold. Dunbar uses a periodic inventory system. A- Determine cost of goods sold B- Calculate Average Cost March 5 2,974 @ $12 March 21 7,435 @ $15 March 13 5,205 @ $13 March 26 2,974 @ $16
Explanation / Answer
A. Cost of goods sold = Beginning inventory + Net Purchases - Ending inventory
Beginning inventory = 3,718 units * $10 = $37,180
Add: Purchases =
2,974 units * $12 = $35,688
5,205 units * $13 = $67,665
7,435 units * $15 = $111,525
2,974 units * $16 = $47,584
Total purchases = $262,462
Ending inventory units = Total number of units - Units sold
Total number of units = 3,718 + 2,974 + 5,205 + 7,435 + 2,974 = 22,306
Units sold = 17,844
Ending inventory units = 22,306-17,844 = 4,462 units
Ending inventory = 2,974 units * $16 + 1,488 units (4,462 - 2,974) * $15 = $47,584 + $22,320 = $69,904
Cost of goods sold = $37,810 + $262,462 - $69,904 = $229,738
B. Average cost = (3,718 * $10 + 2,974 * $12 + 5,205 * $13 + 7,435 * $15 + 2,974 * $16) / (3,718 +2,974+ 5,205 + 7,435 + 2,974) = $300272 / 22,306 = $13.46
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