Answer :
Answer:
Ending inventory = $770000
Explanation:
given data
Date Transaction Number of Units Cost per Unit
1/1 Beginning Inventory 400 $3,200
6/6 Purchase 800 $3,600
9/10 Purchase 1,200 $4,000
11/15 Purchase 800 $4,200
solution
Date Units Unit cost Total
Beg inventory 400 3200 1280000
6 Jun 800 3600 2880000
10 Sep 1200 4000 4800000
15 Nov 800 4200 3360000
Total 3200 12320000
so here Average unit cost will be
Average unit cost = [tex]\frac{ 12320000}{3200}[/tex]
Average unit cost = $3850
and
Ending inventory is
Ending inventory = ( 3200 - 3000 ) × 3850
Ending inventory = $770000
The value of ending inventory is $770,000.
What is inventory?
The inventory refers to the stock held by the business either for sale or for further production. There are several methods for calculating the value of inventories such as LIFO, FIFO, average cost, and so on.
The value of inventory can be calculated as follows:
[tex]\rm Value \:of \:ending\:inventory = Ending \:inventory \times Average \:cost[/tex]
The calculation of ending inventory is given in the attachment.
The total purchases is 3,200 units and the given number of units sold is 3,000.
Therefore the ending inventory will be 200 units.
The average cost is calculated as follows:
[tex]\rm Average \:cost= \dfrac{Total\:cost\:of\:purchase}{Total\:units}\\\\Average \:cost = \dfrac{\$12,320,000}{3,200}\\\\Average \:cost = \$3850[/tex]
Therefore the value of ending inventory will be:
[tex]\rm Value \:of \:ending\:inventory = Ending \:inventory \times Average \:cost\\\\\rm Value \:of \:ending\:inventory = 200 \times \$3850\\\\\rm Value \:of \:ending\:inventory = \$770,000[/tex]
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