What is inventory cost?

Accounting help!! Average inventory cost method...??

• Accounting questions. Help with average inventory cost method. I am a little confused on a few of my questions for a quiz. I have the LIFO and FIFO down now...but not so much when it comes to average inventory cost method. Here are my questions if you could help and include an explanation for your answer: 1. The Baby Company sells blankets for $30 each. The following was taken from the inventory records during July. July 3, Purchase, 5 unit, cost $15 July 10, Sale, 3 units July 17, Purchase, 10 units, cost $17 July 20, Sale, 6 units July 23, Sale, 3 units July 30, Purchase, 10 units, cost $20 Assuming that the company uses the perpetual inventory system, determine the ending inventory for the month of July using the average inventory cost method. $251 $226 $250 $225 2. The following lots of particular commodity were available for sale during the year: Beginning inventory, 10 units at $61 First purchase, 25 units at $63 Second purchase, 30 units at $64 Third purchase, 15 units at $73 The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year according to the average cost method? $1,300 $1,305 $1,415 $1,236 I sincerely appreciate any help and please, feel free to help me learn with a good explanation. Thank you.

• Answer:

  Qn 1 July 3, Purchase, 5 unit, cost $15 July 10, Sale, 3 units (Bal. 2 units @ total of $30) July 17, Purchase, 10 units, cost $17 (Bal. 12 units @ total of $200, or ave. of $16.67) July 20, Sale, 6 units (Bal. 6 units @ total of $100, or ave. of $16.67)) July 23, Sale, 3 units (Bal. 3 units @ total of $50, or ave. of $16.67) July 30, Purchase, 10 units, cost $20 (Bal. 13 units @ total of $250, or ave. of $19.23 each) Answer : $250 Qn 2 Beginning inventory, 10 units at $61 First purchase, 25 units at $63 Second purchase, 30 units at $64 Third purchase, 15 units at $73 Total: 80 units for $5,200; ave. cost $65 each Ending inventory: 20 units @ $65 each = $1,300 Answer : $1,300 (Periodic is always easier than perpetual)