Flex Co. uses a periodic inventory system. The following are inventory transacti
ID: 2413404 • Letter: F
Question
Flex Co. uses a periodic inventory system. The following are inventory transactions for the month of January:
1/1
Beginning inventory
10,000 units at $3
1/5
Purchase
5,000 units at $4
1/15
Purchase
5,000 units at $5
1/20
Sales at $10 per unit
10,000 units
Flex uses the average pricing method to determine the value of its inventory. What amount should Flex report as cost of goods sold on its income statement for the month of January?
1/1
Beginning inventory
10,000 units at $3
1/5
Purchase
5,000 units at $4
1/15
Purchase
5,000 units at $5
1/20
Sales at $10 per unit
10,000 units
Explanation / Answer
Units Unit cost Total Beginning inventory 10000 3 30000 5-Jan 5000 4 20000 15-Jan 5000 5 25000 Total 20000 75000 Average cost = 75000/20000= $3.75 Cost of goods sold = 10000*3.75 = $37500
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