Assume that Wally World uses a periodic weighted average inventory system. During the year, it had two sales. Calculate the weighted average cost per unit on hand as of June 30 when it figured its cost of goods sold for the month.

Date

Activity

Jan. 1

Beginning Inventory

8 @ $12

Jun. 5

Purchase

12 @ $15

Jun. 28

Purchase

10 @ $18

Jun. 8

Sale

6 units

Jun. 30

Sale

8 units

Question

Assume that Wally World uses a periodic weighted average inventory system. During the year, it had two sales. Calculate the weighted average cost per unit on hand as of June 30 when it figured its cost of goods sold for the month.

Date

Activity

Jan. 1

Beginning Inventory

8 @ $12

Jun. 5

Purchase

12 @ $15

Jun. 28

Purchase

10 @ $18

Jun. 8

Sale

6 units

Jun. 30

Sale

8 units

BlackTom AI · Accepted Answer

To approach this problem, we first identify that Wally World uses a periodic weighted average method for inventory costing. We must determine the weighted average cost per unit of goods available for sale during the period, which is then used to value COGS and ending inventory for June 30.

Option 1: $15.20/unit
This value comes from calculating the cost of goods available for sale divided by the total units available for sale during the period. Beginning inventory: 8 units at $12 = $96. Purchases: 12 units at $15 = $180; 10 units at $18 = $180. Total units available = 8 + 12 + 10 = 30 units. Total cost = $96 + $180 + $180 = $456. Weighted average cost per unit = $456 / 30 = $15.20. Since ending inventory (before applying COGS) would be valued at this average, this option aligns with the periodic weighted-average calculation.

Option 2: $15/unit
This would be a rounded or simplified figure that does not match the precise calculation. The exact weighted average per unit is $15.20, not $15.00, given the totals above. Rounding to $15.00 would misstate the average cost per unit in this scenario.

Option 3: $10/unit
A $10 per unit cost would imply a much lower average than any of the actual costs in the period, and would not reflect the weighted combination of $12, $15, and $18 costs across 30 units. This value ignores the actual cost data and unit counts.

Option 4: $18/unit
An $18 per unit average would suggest that all units were valued at the highest unit cost, which is inconsistent with the presence of cheaper costs ($12 and $15) in beginning inventory and purchases. The weighted average must account for all cost layers, not just the latest purchase price.

In summary, calculating the weighted average cost per unit requires combining all inventory layers: 8 units at $12, 12 units at $15, and 10 units at $18, totaling 30 units and $456 in cost, yielding $15.20 per unit. The other options reflect common pitfalls like rounding errors, ignoring some cost layers, or misapplying the averaging concept.

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