A company purchased 100 units for $ 50 each on January 31. It purchased 150 units for $ 35 each on February 28. It sold a total of 200 units for $ 50 each from March 1 through December 31. If the company uses the weightedminus average inventory costing method, calculate the cost of ending inventory on December 31. (Assume that the company uses a perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

$2,050

Explanation:

Given the following ;

First purchase(January 31):

Unit purchased = 100

Price per unit = $50

Second purchase(February 28):

Unit purchased = 150

Price per unit = $35

Using the Weighted average inventory costing method whereby price of inventory is calculated each time goods are added to the inventory. This is done by calculating the total cost of each purchases divided by the total units in the inventory.

WEIGHTED COST = (cost of First inventory +cost of Second inventory)÷(unit of first + unit of second inventory)

Weighted cost = (100×$50 + 150×$35) ÷ (100 + 150)

Weighted cost = $(5000 + 5250) ÷ (250) = $10,250 ÷ 250 = $41.00 per unit

UNIT sold (March-December) = 200

Unit left ( Ending Inventory) = 200 - 150 = 50

Cost of ending inventory = 50 × $41 = $2,050