One of the methods permitted by Generally Accepted Accounting Principle for reporting the value of a firm's inventory is weighted average inventory pricing.
Southwest Consulting began its fiscal year with an inventory of 630 units valued at $13.71 per unit. During the year it made the purchases listed in the following table.

date:  january 26 ,, august 20 ,  december 27    unit purchased: 920 ,  295  , 500       unit cost($)  :    $13.91   ,$13.53   , $14.20
At the end of the year, 115 units remained in its inventory. For full marks your answer(s) should be rounded to the nearest cent.

Determine:
a.  The weighted average cost of the units purchased during the year.

b.   The weighted average cost of the beginning inventory and all units purchased during the year.

c.    The value of the ending inventory based on the weighted-average cost calculated in b).

To solve this problem, we will approach it step by step.

### Given Information:

1. **Beginning Inventory:**
   - Units: 630
   - Unit Cost: $13.71

2. **Purchases during the year:**
   - January 26: 
     - Units: 920
     - Unit Cost: $13.91
   - August 20:
     - Units: 295
     - Unit Cost: $13.53
   - December 27:
     - Units: 500
     - Unit Cost: $14.20

3. **Ending Inventory:**
   - Units remaining at the end of the year: 115 units

We need to calculate the following:

### Part (a): The weighted average cost of the units purchased during the year
For this, we'll consider only the purchases made during the year (excluding the beginning inventory). The formula for the weighted average cost is:

\[
\text{Weighted Average Cost} = \frac{\text{Total Cost of Purchases}}{\text{Total Units Purchased}}
\]

### Part (b): The weighted average cost of the beginning inventory and all units purchased during the year
This includes both the beginning inventory and all purchases made during the year. The formula is:

\[
\text{Weighted Average Cost} = \frac{\text{Total Cost of Beginning Inventory + Total Cost of Purchases}}{\text{Total Units of Beginning Inventory + Total Units Purchased}}
\]

### Part (c): The value of the ending inventory based on the weighted-average cost calculated in Part (b)
Finally, we will calculate the value of the ending inventory by multiplying the number of units left in the inventory by the weighted average cost obtained in part (b).

Let's calculate this step by step.Here are the results:

### Part (a): Weighted Average Cost of Units Purchased During the Year
- The weighted average cost of the units purchased during the year is **$13.93** per unit (rounded to the nearest cent).

### Part (b): Weighted Average Cost of the Beginning Inventory and All Units Purchased During the Year
- The weighted average cost of the beginning inventory and all units purchased during the year is **$13.87** per unit (rounded to the nearest cent).

### Part (c): Value of the Ending Inventory
- The value of the ending inventory, based on the weighted average cost calculated in Part (b), is **$1,595.08** (rounded to the nearest cent).

Do you want further details on any of these calculations? Here are some related questions for additional practice:

1. How does the FIFO method differ from the weighted average method for inventory valuation?
2. If the ending inventory had been 150 units, how would that affect the ending inventory value?
3. How would the weighted average cost change if there was an additional purchase in November?
4. How does inflation impact the accuracy of weighted average inventory pricing?
5. Can the weighted average method result in higher or lower taxes compared to LIFO?

**Tip:** In a rising price environment, FIFO typically results in a higher ending inventory value compared to the weighted average method.

Learn how to calculate the weighted average cost of inventory and determine the ending inventory value using accounting principles. This problem involves inventory valuation using the weighted average method, including specific calculations based on purchases and beginning inventory. Suitable for college-level students and professionals.

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