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Bean Nursery sells bark to its customers at retail. Bean buys bark from a plywood mill in bulk and transports the bark in its own trucks. Information relating to the beginning inventory and purchases of bark is as follows:
Required
Find the cost of 1,200 cubic yards in the ending inventory by the weighted-average-cost method. Carry average cost per cubic yard to four decimals.
Check Figure
Cost of ending inventory, $519.24
Compute the cost of ending inventory using weighted-average-cost method.
Explanation of Solution
Weighted-average cost method: Under average cost method, company calculates a new average after every purchase. It is determined by dividing the cost of goods available for sale by the units on hand.
Compute the cost of ending inventory of 1,200 cubic yards using weighted-average-cost method.
Table (1)
Thus, the cost of 1,200 cubic yards using weighted-average-cost is $519.24.
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