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Ending inventory using average cost method

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Bill's Hardware Store sell sandpaper. On October 1st, Bill had 4000 sheets of sandpaper at an average cost of .25 each. The store also made the following purchases of sandpaper inventory during the month:

Date Units Purchased Cost Per unit Total Cost
3-Oct 8000 $0.24 $1,920.00
17-Oct 3000 $0.26 $780.00
21-Oct 6000 $0.28 $1,680.00
29-Oct 4000 $0.27 $1,080.00
Total 21000 $5,460.00

If the store sold 2300 sheets of sandpaper during October, what is the cost of ending inventory using the average cost method of inventory costing.

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Solution Preview

We calculate the average cost per unit = Cost of goods available for sale/Total units
Cost of ...

Solution Summary

This solution explains how to calculate ending inventory using average cost method.