The Loyd Company had 150 units of product Omega on hand at December 1, Year 1 co

Question

The Loyd Company had 150 units of product Omega on hand at December 1, Year 1 costing $400 each. Purchases of product Omega during December were as follows: Date Units Unit Cost December 7 100 $440 December 14 200 $460 December 29 300 $500 Sales during December were 500 units on December 30. Assume a perpetual inventory system is used. Round per unit costs to two decimal places. The cost of inventory at December 31, Year 1 under the moving-average method would be closest to: A. $125,000 B. $115,000 C. $100,000 D. $104,000

Explanation / Answer

average cost = $461

cost of inventory at December 31 250 x $461 = $115,250

i.e. closest to B $115,000

Dec-01 150 $400 $60,000 Dec-07 100 $440 $44,000 Average 250 $416 $1,04,000 Dec-14 200 $460 $92,000 Average 450 $436 $1,96,000 Dec-29 300 $500 $1,50,000 Average 750 $461 $3,46,000

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