Question

Hardware Inc. has a periodic inventory system and uses the weighted average method. The company began the year with 150 large brass switch plates on hand at a cost of $4.00 each. Purchases of switch plates during the year were as follows:

Date of Transaction Quantity Received Unit Cost
May 7 200 $ 4.20
June 11 200 $ 4.40
November 22 250 $ 4.80

The switch plates sell for $7.00 each. If Hardware sells 570 switch plates during the year, what is the company's cost of goods sold?
A) $3,990
B) $2,508
C) $2,480
D) $2,560

Answer 1

To calculate the cost of goods sold using the weighted average method, determine the weighted average unit cost of the switch plates in stock and multiply it by the number of switch plates sold.

Step-by-step explanation:

To calculate the cost of goods sold using the weighted average method, we need to determine the weighted average unit cost of the switch plates in stock.

Here's how to calculate the weighted average unit cost:

1. Start with the units in stock at the beginning of the year and their respective costs: 150 units at $4.00 each.
2. Add the units purchased during the year and their respective costs: 200 units at $4.20 each, 200 units at $4.40 each, and 250 units at $4.80 each.
3. Divide the total cost by the total number of units: (150 * $4.00) + (200 * $4.20) + (200 * $4.40) + (250 * $4.80) divided by (150 + 200 + 200 + 250).
4. The weighted average unit cost is $4.47.

To calculate the cost of goods sold, multiply the weighted average unit cost by the number of switch plates sold: $4.47 * 570 = $2,546.90.