Eaton Electronics uses a periodic inventory system. On March 31, Eaton has two p

Question

Eaton Electronics uses a periodic inventory system. On March 31, Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894). In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634). In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968). In June, Eaton sells two of these TVs (serial numbers 11534894 and 11542631). There were no additional purchases or sales during the remainder of the year.

Use the information above to answer the following question. Eaton Electronics uses the weighted average method. What is the company's weighted average cost per unit? (Round the per unit cost to the nearest dollar.)

$1,500

$1,517

$1,527

$1,600

Explanation / Answer

To deteremine the weighted average cost per unit, we need to calculate the total cost of inventory and total units in inventory after all purchase transactions (including opening stock) as company uses the periodic inventory sytem.

Total cost and total inventory is calculated with the use of following table:

Weighted Average Cost Per Unit = Total Cost/Total Units = 16,800/11 = $1,527 per unit (which is Option C)

Month Quantity (A) Cost Per Unit (B) Total Cost (A*B) March 2 1,500 3,000 April 4 1,450 5,800 May 5 1,600 8,000 Total 11 $16,800

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