Financial Reporting And Analysis - Financial Reporting And Analysis Section 2
| Raw materials | $56,000 |
| Direct labor | $40,000 |
| Storage of finished goods | $18,000 |
| Abnormal costs | $6,000 |
| Transportation of raw materials | $10,000 |
The total inventory cost recorded is closest to:
- Option : B
- Explanation : Inventory cost = Raw materials + Direct Labor + Transportation Inventory cost = 56,000 + 40,000 + 10,000 = 106,000. Abnormal cost and storage cost of finished goods are excluded from the cost of inventory.
77. The information on a company’s inventory is given below:
| Opening inventory | 0 units |
| 1st purchase | 500 units at $30/unit |
| 2nd purchase | 1,000 units at $33/unit |
| 3rd purchase | 1,200 units at $34/unit |
| Total Sales | 2,000 units at $50/unit |
Using a periodic inventory system and the weighted average method, the ending inventory value is closest to:
- Option :
- Explanation : Ending Inventory Weighted Average Calculations
Units $/unit Total $ Purchase #1 500 $30 $15,000 Purchase #2 1000 $33 $33,000 Purchase #3 1200 $34 $40,800 Total available 2,700 $88,800 Average cost = 88,800 / 2,700 = $32.89 Ending inventory
= 2,700 – 2,000 = 700 units.Cost of ending inventory = $32.89 * 700 = $23,023
| Date | Purchased | Sold | Cost perbale | Price perbale |
| January 1 | 180 | 0 | 200 | 250 |
| February 1 | 20 | 150 | 210 | 250 |
| March 1 | 0 | 25 | 225 | 275 |
| April 1 | 200 | 0 | 225 | 275 |
| May 1 | 100 | 0 | 250 | 280 |
| June 1 | 0 | 175 | 275 | 300 |
What is the cost of ending inventory?
- Option : A
- Explanation : Weighted average cost per unit = Total cost incurred ÷ Toatal units purchased. Weighted average cost per unit = [(180 * 200) + (20 * 210) + (200 * 225) + (100 * 250)] ÷ 500 = 110,200/500 = $220.4 Ending inventory = Number of units remaining * weighted average cost Ending inventory = [(180 + 20 + 200 + 100) - (150 + 25 + 175)] * 220.4 = $33,060.
| Month | Units purchased | Units sold | Cost per unit | Price per unit |
| January | 50 | 0 | 100 | 150 |
| March | 100 | 25 | 110 | 150 |
| May | 0 | 60 | n/a | 175 |
| June | 125 | 0 | 125 | 175 |
| July | 120 | 0 | 150 | 180 |
| October | 0 | 80 | n/a | 200 |
| December | 0 | 60 | n/a | 225 |
What is the cost of goods sold for the company?
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