Novak Corp. began the year with 8 units of marine floats at a cost of $11 each. During the year, it made the following purchases: May 5, 34 unit at $16; July 16, 17 units at $21; and December 7, 22 units at $25. Assume there are 29 units on hand at the end of the period. Novak uses the periodic approach. Determine the average unit cost:
Novak Corp. began the year with 8 units of marine floats at a cost of $11 each. During the year, it made the following purchases: May 5, 34 unit at $16; July 16, 17 units at $21; and December 7, 22 units at $25. Assume there are 29 units on hand at the end of the period. Novak uses the periodic approach. Determine the average unit cost:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Novak Corp. began the year with 8 units of marine floats at a cost of $11 each. During the year, it made the following purchases: May 5, 34 unit at $16; July 16, 17 units at $21; and December 7, 22 units at $25. Assume there are 29 units on hand at the end of the period. Novak uses the periodic approach.
Determine the average unit cost:
Expert Solution
Step 1
Lets understand the basics.
For determining average unit cost, we need to use below formula.
Average unit cost = (Beginning inventory * Cost per unit) + (Purchases * Cost per unit)/ Total units
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