Ch5. Video 13 - Intermittent WA example

The video tutorial explains the weighted average method for inventory management, focusing on intermittent purchases and sales. It provides step-by-step calculations for two sales transactions, highlighting the differences in cost of goods sold (COGS) and inventory valuation compared to LIFO and FIFO methods. The tutorial concludes with a summary of total revenue, COGS, gross profit, and ending inventory, emphasizing the importance of understanding these concepts for accurate financial reporting.

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

• Weighted average considers the cost of the oldest inventory.

• Weighted average uses the cost of the most recent inventory.

• Weighted average calculates an average cost for all units.

• Weighted average does not consider inventory costs.

In the weighted average method, what is the first step in calculating the cost per unit?

• Add all the costs together.

• Subtract the sales from the purchases.

• Multiply the quantity by the cost for each purchase.

• Divide the total cost by the number of units.

How do you determine the total quantity available to sell in the weighted average method?

• By adding the quantities of all purchases.

• By subtracting sales from purchases.

• By multiplying the number of units by the cost.

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

What is the significance of the 'magic number' in the weighted average method?

• It is the total number of units sold.

• It is the average cost per unit.

• It is the total revenue from sales.

• It is the total cost of goods sold.

What happens to the inventory cost per unit after calculating the weighted average?

• It varies for each unit.

• It remains the same for each unit.

• It is ignored in future calculations.

• It becomes a single average cost for all units.

What is the gross profit calculated as in the weighted average method?

• Total inventory minus total sales.

• Total sales minus total purchases.

• Total COGS minus total revenue.

• Total revenue minus total COGS.

How is the ending inventory value determined in the weighted average method?

• By using the cost of the oldest inventory.

• By using the cost of the most recent inventory.

• By adding the costs of all remaining units.

• By multiplying the remaining units by the weighted average cost.