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Coachlight Inc. has a periodic inventory system. The company purchased 275 units of inventory at $16.50 per unit and 450 units at $17.50 per unit. What is the weighted average unit cost for these purchases of inventory? (Round your final answer to two decimal places.)

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jafransp

Answer:

$17.12

Explanation:

We know,

Under weighted average cost of capital (Periodic Inventory System) = Total Inventory cost / Total Inventory

Given,

Total Inventory = 275 + 450 = 725

Total Inventory Cost =

275 units × $16.50 = $4,537.5

450 units × $17.50 = $7,875

Total cost = $12,412.5

Putting the values into the above formula,

Weighted average unit cost = $12,412.5 ÷ 725 units

Therefore, weighted average unit cost = $17.12

Weighted average inventory method shows us how much direct cost we incur during production.

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