Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 255 $ 151 6/5 Purchase 455 $ 171 11/10 Purchase 155 $ 211 During the year, Maxim sold 510 units. What is cost of goods sold using the average cost method

Answer:

$87,858.55

Explanation:

Date        Transaction       Number of Units       Cost per Unit

1/1            Beg.                           255                         $151

6/5          Purchase                   455                         $171

11/10        Purchase                    155                         $211

total                                           865

total purchases + beginning inventory = (255 x $151) + (455 x $171) + (155 x $211) = $149,015

average cost per unit = $149,015 / 865 units = $172.27

COGS = $172.27 x 510 units = $87,858.55

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