Average cost is the cost that is charged to the cost of goods sold when the cost of goods purchased differs frequently. To avoid the fluctuations in the purchase prices of the goods, it is assumed that the fluctuations are evenly distributed among the units sold.
Assume a company purchased goods in the following quantities and in the following rates.
|
Month |
Units purchased |
Rate |
Cost of Goods Purchased |
|
Jan |
400 |
60.00 |
24000 |
|
Feb |
560 |
58.00 |
32480 |
|
Mar |
630 |
64.00 |
40320 |
|
Apr |
420 |
57.00 |
23940 |
|
May |
390 |
61.00 |
23790 |
|
Jun |
510 |
63.00 |
32130 |
|
July |
360 |
56.00 |
20160 |
|
|
|
|
|
|
Total |
3,270 |
|
196820 |
Average cost = 196820 / 3270 = $60.19
The Pyramid Company has used the LIFO method of accounting for inventory
Causwell Company began 2018 with 10,000 units of inventory on
Cane Company manufactures two products called Alpha and Beta that sell for
The Cecil-Booker Vending Company changed its method of valuing inventory
The following information is taken from the inventory records of the CNB
On January 1, 2018, Pet Friendly Stores adopted the retail
Various cost and sales data for Meriwell Company for the just completed
Inverness Steel Corporation is a producer of flat-rolled carbon,
The Little Theatre is a nonprofit organization devoted to staging plays for
Millington Materials is a leading supplier of building equipment, building products
