Accounting for the Sale of Inventory - Intermittent Weighted Average Example

The video tutorial explains the weighted average method for inventory management, focusing on intermittent purchases and sales. It provides a detailed walkthrough of calculating cost of goods sold (COGS) and inventory using this method, with examples of multiple sales and purchases. The tutorial emphasizes understanding the process and offers tips for simplifying calculations. It concludes with a summary of key figures like total revenue, COGS, gross profit, and ending inventory.

What is the primary difference between the weighted-average method and LIFO/FIFO?

• Weighted-average uses the average cost of all inventory items.

• Weighted-average does not consider inventory costs.

• Weighted-average considers the cost of the oldest inventory.

• Weighted-average uses the cost of the newest inventory.

How is the sales revenue calculated in the first sale example?

• By adding the total cost of goods sold to the profit margin.

• By dividing the total revenue by the number of units sold.

• By multiplying the number of units sold by the selling price per unit.

• By multiplying the number of units sold by the cost per unit.

What is the first step in calculating the weighted-average cost?

• Multiply the quantity of each purchase by its cost.

• Add up all the costs of the inventory.

• Subtract the cost of goods sold from total revenue.

• Divide the total cost by the number of units.

What happens to the ending inventory from the first sale?

• It is sold at a discount.

• It becomes the beginning inventory for the next sale.

• It is discarded.

• It is recalculated using FIFO.

How is the new weighted-average cost calculated after additional purchases?

• By using the cost of the most recent purchase.

• By averaging the costs of all purchases and sales.

• By dividing the total cost by the total number of units available.

• By subtracting the cost of goods sold from the total cost.

What is the formula for calculating gross profit?

• Net income minus operating expenses.

• Total sales minus total purchases.

• Sales revenue minus cost of goods sold.

• Total revenue minus total expenses.

What is the ending inventory value calculated in the final section?

• $306.20

• $6,583.30

• $15,125.00

• $2,012.50