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Under the periodic average cost method, 30 units cost $150 in total and 11 units remain in ending inventory. What is the ending inventory value?
A$45
B$55
C$65
D$95
Answer & Solution
Correct answer: B. $55
1. Average cost per unit = $\$150 / 30 = \$5$.
2. Ending inventory = units remaining $\times$ average cost = $11 \times \$5$.
3. Ending inventory = $\$55$.
4. Rule out $\$45$: that is the periodic LIFO ending inventory.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.2 "Periodic Inventory System", p.121_
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