CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Greenbelt Processors had a beginning inventory of 798 units valued at a cost of $34,895. It purchased 4,474 units of new inventory worth $195,402 during the year. A year-end audit revealed that it had 853 units on hand.

If Greenbelt uses the weighted average cost method, what is its COGS for the year?
A. $193,000
B. $193,027
C. $193,035
Explanation: Using the average cost method, we price all units, including those in beginning inventory and purchased during the year, at an average price.

Average price = [34,895 + 195,402] / [798 + 4,474] = 43.683
Ending inventory = 853 x 43.683 = 37,262
COGS = BI + Purchases - EI = 34,895 + 195,402 - 37,262 = 193,035

User Contributed Comments 1

User Comment
jackwez to save time you could have also taken total units (5272 - 853) x $43.683
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