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Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Material
A wholesaler had opening inventory of 300 units of product Emm valued at $20/unit at begining of January. The following receipts and sales were recorded during January.
2 Jan sales 250
12 January receipts 400
21 Jan sales 200
29 Jan sales 75
The purchase cost of receipts was $ 22/unit. Using a periodic weighted average method of valuation, calculate the value of closing inventory at the end of January?
$____
This is a relatively easy method: simply work out the average value of opening stock Plus purchased stock. Sales are used only to work out the quantity of closing inventory.
So, opening stock plus purchases averaged gives:
(300 x $20 +400 x $22)/(300 + 400) = 14800/700 = $21.14/unit
Units at the end of the period = 300 – 250 + 400 – 200 – 75 = 175
So, inventory value = $21.14 x 175 = 3,700