Oct. 1 Inventory 300 units at $8
13 Sale 175 units
22 Purchase 375 units at $10
29 Sale 280 units
Assuming a perpetual inventory system and using the weighted average method, determine (a) the weighted average unit cost after the October 22 purchase, (b) the cost of the merchandise sold on October 29, and (c) the inventory on October 31.
Answer:
a. Weighted average unit cost: $9.50
Inventory total cost after purchase on October 22:
125 units @ $8 $1,000
375 units @ $10 3,750
500 $4,750
Weighted average unit cost = $9.50 ($4,750 ÷ 500 units)
b. Cost of merchandise sold (October 29): $2,660 (280 units × $9.50)
c. Inventory, October 31: $2,090 (220 units × $9.50)