Question

Kingbird, Inc. just began business and made the following four inventory purchases in June: June 1 177 units $1062 June 10 236 units 1652 June 15 236 units 1888 June 28 177 units 1593 $6195 A physical count of merchandise inventory on June 30 reveals that there are 236 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is $1770. $1653. $2065. $1888.

Answer 1

Answer:

Using the average cost method, the amount allocated to the ending inventory on June 30 is $1770

Explanation:

Kingbird, Inc.

Date            Units                      Cost

1 June       177 units              $1062

10 June       236 units             1652

15 June           236 units           1888

28 June         177 units              1593

Total                826 units                        $6195

30 June Ending Inventory =  236 units

Average cost = Total Cost/ Total Units= $ 6195/826= $ 7.5 per unit

Ending Inventory Average Cost= $ 7.5 * 236= $ 1770

Using the average cost method, the amount allocated to the ending inventory on June 30 is $1770

Answer 2

Answer:

$ 1770

Explanation:

The data is

Date of Purchase Units Total Cost Incurred

June 1 177 $1,062

June 10 236 $1,888

June 15 236 $2,360

June 28 177 $2,124     826 $7,434

Weighted Average Price = Total cost incurred /Total Units

= $7,434 / 826 units

Weighted Average Price = $9 per unit

Since, the overall cost of each purchase is given; we have taken the sum of them in the numerator. Or else, we would have taken sum of weighted average of unit cost and the number of units which would eventually lead to the same answer.

Given ending inventory on June 30 = 236 units

Therefore value of ending inventory as per weighted average cost method = $ 7.5 * 236= $ 1770

Therefore, the answer is $ 1770