Question

Wattan Company reports beginning inventory of 10 units at \(60 each. Every week for four weeks it purchases an additional 10 units at respective costs of \)61, \(62, \)65, and $70 per unit for weeks 1 through 4.

Compute the cost of goods available for sale and the units available for sale for this four-week period. Assume that no sales occur during those four weeks.

Short answer

The total cost of goods available for sale equals$3,180.

Step-by-step solution

Definition of Perpetual Inventory System

The method using the computer-based system to record the sales and purchase of inventory is known as a perpetual inventory system. This system reports the sale and purchase immediately.

Cost Assigned to Ending Inventory

Particular	Units purchased	X	Per unit cost	=	Total cost
Beginning inventory	10	X	$60	=	$600
Week 1	10	X	$61	=	$610
Week 2	10	X	$62	=	$620
Week 3	10	X	$65	=	$650
Week 4	10	X	$70	=	$700
The total cost of goods available for sale					$3,180