An internal auditor found the following information while reviewing the monthly financial statements for a wholesaler of safety glasses:
Opening inventory: 1,000 units at $2 per unit
Purchased: 5,000 units at $3 per unit
Sold: 3,000 units at $7 per unit
The cost of goods sold was reported at $8,500. Which of the following inventory methods was used to derive this value?
To determine the cost of goods sold (COGS) using the average cost method, calculate the weighted average cost per unit for the inventory. The opening inventory had 1,000 units at $2 per unit, and 5,000 units were purchased at $3 per unit, making the total inventory 6,000 units at a total cost of $17,000 ($2,000 + $15,000). The average cost per unit is $17,000 / 6,000 units = $2.8333 per unit. For 3,000 units sold, the cost would be 3,000 units x $2.8333 per unit, which equals approximately $8,499.99, rounding to $8,500. This aligns with the reported COGS, indicating the average cost method was used.
It's A (weighted average method)
the answer is A: (1000x$2) +(5000x$3) =$17,000 $17,000/6000 units = 2.8333 2.8333x 3000 units = $8,499.999
A is the only one correct
why D?
A is correct.
A is correct
Is this correct?