Periodic Average Inventory Methods Example Help

Periodic Average Inventory Methods Example, Concepts, Illustration, Sample Calculation Help Online

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Meaning of Periodic Average Inventory

Under Periodic Average Inventory Method, we can calculate the total cost of the units and divide by the total number of units. What if we had 20 units at $100 and 10 units at $500. You might notice that the ratio of $100 units to $500 units is still the same (2:1). We can confirm that the weighted average will be the same by a simple. Suppose the total cost of all the units is $7,000 and there are 30 units. Divide $7,000 by 30 and the weighted average is $233.33.
Periodic Average Inventory Methods Example is one of the easiest of all the inventory methods. Because inventory is calculated at the end of the period, we figure out the total cost of goods available for sale and divide by the number of units.

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Periodic Average Inventory Methods Example Explanation

Number of units for sale is 415 units with a total cost of $3,394.00. Now $3,394.00 will be divided by 415 units, so weighted average cost of $8.18 per unit. The company sold 245 units. The total cost of goods sold is $2004.10. ($8.18 x 245). There are 170 units remaining in ending inventory (415 – 245). The cost of ending inventory is $1,390.60. ($8.18 x 170).
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