ACCA MA · Chapter 4 · Question 6 of 11
Inventory records for a material show: Day 1 Opening inventory 200 units at $5 Day 5 Purchased 300 units at $6 Day 10 Issued 400 units Day 15 Purchased 250 units at $7 Day 20 Issued 200 units Using the cumulative weighted average cost (AVCO) method, recalculated after each receipt, what is the total cost of the issues?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $3,560
Explanation
After day 5: 500 units costing 1,000 + 1,800 = $2,800, average $5.60. Day 10 issue: 400 x 5.60 = $2,240, leaving 100 units at $560. After day 15: 350 units costing 560 + 1,750 = $2,310, average $6.60. Day 20 issue: 200 x 6.60 = $1,320. Total issues = 2,240 + 1,320 = $3,560. FIFO would give $3,500.
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