Inventory value using periodic weighted average cost /AVCO ( video below)

A firm has the following transactions with its product R.

1 January 20X3  Opening inventory: nil

10 February 20X3   Buys 15 units at $145 per unit

12 February 20X3   Buys 17 units at $120 per unit

9 April 20X3   Sells 13 units at $195 per unit

13 August 20X3   Buys 11 units at $95 per unit

15 December 20X3 Sells 17 units at $195 per unit

The firm uses periodic weighted average cost (AVCO) to value its inventory. What is the inventory value at the end of the year?

Answer

Price per unit under periodic weighted average cost

= Total cost /(opening quantity + total quantity received)

= ($0+$145 x 15 + $120 x 17 + $95 x 11)/(0+15+17+11)

= $122.33 per unit.

Valuation of closing inventory of 13 units

= (0+15+17+11–13–17) x $122.33 = 13 x $122.33

= $1,590.29

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