Question

Refer to the information in QS 5-4 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round per unit costs and inventory amounts to cents.)

Short answer

The total ending inventory of the business is$465.

Step-by-step solution

Definition of Inventory Management

Managing the inventory to avoid the shortage and excess inventory in the business entity is known as inventory management.

Assigned to Ending inventory

$\begin{array}{rcl}\mathrm{Ending}\mathrm{inventory}& =& \frac{\mathrm{Total}\mathrm{cost}\mathrm{of}\mathrm{goods}\mathrm{available}\mathrm{for}\mathrm{sale}}{\mathrm{Total}\mathrm{units}\mathrm{available}\mathrm{for}\mathrm{sale}}\times \mathrm{Units}\mathrm{in}\mathrm{ending}\mathrm{inventory}\\ & =& \frac{\left(320\times \$3\right)+\left(80\times \$3.20\right)+\left(100\times \$3.34\right)}{500}\times 150\\ & =& \$465\end{array}$