Answer:
Option (d) $75,250
Explanation:
Data provided in the question:
Units Unit Cost
Inventory, Jan. 1 5,000 $8
Purchase, April 2 15,000 $10
Purchase, Aug. 28 20,000 $12
Units on hand = 7,000
Now,
Total cost of the inventory
= ( 5,000 × $8 ) + ( 15,000 × $10 ) + ( 20,000 × $12 )
= $40,000 + $150,000 + $240,000
= $430,000
Therefore,
Average cost of the inventory = [ Total cost of the inventory ] ÷ [ Total units ]
= $430,000 ÷ ( 5,000 + 15,000 + 20,000 )
= $430,000 ÷ 40,000
= $10.75 per unit
Thus,
Cost of ending inventory = Units on hand × Average cost of the inventory
= 7,000 × $10.75
= $75,250
Option (d) $75,250
