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Coronado has the following inventory information. July1Beginning Inventory15 units at $20$300 7Purchases90 units at $232070 22Purchases20 units at $25500 $2870 A physical count of merchandise inventory on July 31 reveals that there are 25 units on hand. Using the average-cost method, the value of ending inventory is

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Answer:

$574

Explanation:

Given:

Beginning inventory 15 units @ $20 = 15 × 20 = $300

Purchases of 90 units @ $23 = 90 × 23 = $2,070

Purchases of $20 units @25 = $500

Total cost = 300 + 2070 + 500 = $2,870

Total units purchased = 15 + 90 + 20 = 125 units

Average cost = Total cost / total units purchased

                     = 2,870 / 125

                     = $22.96

Ending inventory units = 25

As per average cost method, value of ending inventory = 25 × 22.96

                                                                                              = $574

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