COGS using Weighted average Method!!!

[dudeinthecity]

Units Unit Price
Beginning Inventory 709 $2.00
Purchases 556 $6.00
Sales 959 $13.00
SGA Expenses $2,649 per annum
What is the cost of goods sold using the weighted average method?
A) $3,423.82.
B) $2,918.00.
C) $3,604.02.
Can someone please explain how to solve this question. Thank you

 

[jut111]

c.
It’s simple. 709+556 - beginning inventory + purchases. then divide each by that total to get your weights.
so it works out as 56% from beginning inventory, 44% from purchases. multiply those percentages by you purchase prices and add gets you W/A of 3.76. times that by units sold, and there you go.

 

[brianr]

(709 * $2) + (556 * $6) = $4,754.00
$4,754 / (709+556) = $3.758102 per unit
$3.758102 * 959 = $3,604.02

 

[Conquistador07]

You don’t include SG&A in COGS because SG&A is expensed in the period incurred instead of capitalizing with other invesntory costs like conversion cost or allocation of fixed production overhead based on normal capacity levels.
Just a reminder…

 

[brianr]

Conquistador07 Wrote:
——————————————————-
> You don’t include SG&A in COGS because SG&A is
> expensed in the period incurred instead of
> capitalizing with other invesntory costs like
> conversion cost or allocation of fixed production
> overhead based on normal capacity levels.
>
> Just a reminder…
You do not include SG&A in cogs because SG&A expenses are seperate from COGS. Rev - COGS = Gross Profit.

 

[Atomic_Sheep]

brianr wrote709 * $2) + (556 * $6) = $4,754.00 $4,754 / (709+556) = $3.758102 per unit $3.758102 * 959 = $3,604.02

What happens in the next period then? Do we use FIFO and say that the starting inventory for the next period is:
709+556=1265
1265-959=306@$6?
In other words how do we track which of the inventory got sold and which remains? Seems like a mish mash between specific identification, FIFO and a 3rd method.

 

[S2000magician]

Beginning inventory next period is ending inventory this period:
$3.758102 × 306 = $1,150.