AVCO Valuation Method

John,

The following question is in my revision kit and I believe I followed the steps we followed in our lecture to get to the answer, but I can’t get it right. Here is the question followed by my workings:

A firm has the flollowing transactions with its Product R

1 Jan 20X1 -> Opening Inventory: 0
1 Feb 20X1 -> Buys 10 units at $300 per unit
11 Feb 20X1 -> Buys 12 units at $250 per unit
1 Apr 20X1 -> Sells 8 units at $400 per unit
1 Aug 20X1 -> Buys 6 units at $200 per unit
1 Dec 20X1 -> Sells 12 units at $400 per unit

The firm uses AVCO to value its inventory. What is the inventory value at the end of the year

A. $nil
B. $2,057.12
C. $2400.00
D. $2007.2

Workings

Date Units Cost

1 Jan 0 0
1 Feb [Buy] 10×300= $3000
11 Feb [Buy] 12×250= $3000
Sub-total 22, $6000
AVG Cost/unit = $272.72

1 Apr [Sell] (8)
Sub-total 14×272.72= $3818.18
1 Aug [Buy] 6×200= $1200
Sub-total 20, $5018.18
AVG Cost/unit = $250.91

1 Dec [Sell] (12)
Sub-total 8×250.91= $2007.2

Answer D, which is incorrect. What am I doing wrong? I thought I was following the right steps.

Appreciate your help!

Rachel