Wize University Introduction to Financial Accounting Textbook > Inventory
Average Cost Method (Periodic)
Popular Courses
COMM 217
Concordia University
ACCT 2301
The University of Texas at Dallas
Intro to Financial Accounting
General Course
COMM 293
University of British Columbia
Intro to Financial Accounting
University Study Guides
MGCR 211
McGill University
Intro to Financial Accounting
University Study Guides
ACCT 217
University of Calgary
ADMS 2500
York University
COMMERCE 1AA3
McMaster University
ACC 100
Toronto Metropolitan University
COMM 111
Queen's University
ADM 1340
University of Ottawa
BU127
Wilfrid Laurier University
RSM219H1
University of Toronto
COMM 1101
Dalhousie University
AFM 101
University of Waterloo
BUS 251
Simon Fraser University
AFA 100
Toronto Metropolitan University
BUSINESS 3321K
Western University
0:00 / 0:00
Average Cost Method (Periodic Inventory)
Also called the weighted-average method, this costing method pools all the available units into a single batch with an average cost per unit.
Characteristics of the Average Cost Method
- A single average cost is found at the the end of the period
- COGS is based on the average cost at the time of sale
Average Cost Formula:
Wize Tip
"Available for sale" is the sum of the beginning inventory and all the purchases.
0:00 / 0:00
Example: Average Cost Method (Periodic Inventory)
The following transactions took place during August 2020, all purchases and sales were on account.
Using the weighted average method and periodic inventory system:
- What is the correct amount of cost of goods sold for the month?
- What is the correct amount that should be reported as inventory on August 31st, 2020?
Practice: Average Cost (Periodic Inventory)
ABC Inc. had the following transactions affecting inventory during 2020, the company uses the average cost method and the periodic inventory system:
All transactions are on account.
What is the total cost of goods sold that should be recorded for the year?
Round unit costs to 4 decimal places and final answer to 2 decimal places.