A business has 100 units costing Rs. 10 each and 200 units costing Rs. 13 each. Under the weighted average cost method, the cost per unit is:
Correct answer: D. Rs. 12.00
- A. Rs. 11.00
- B. Rs. 11.50
- C. Rs. 12.33
- D. Rs. 12.00
Explanation
Total cost is Rs. 3,600, calculated as Rs. 1,000 plus Rs. 2,600. Dividing Rs. 3,600 by 300 units gives a weighted average cost of Rs. 12 per unit.
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About Inventory Valuation
Inventory valuation determines the cost of unsold goods and its effect on cost of sales and profit. The work covers inventory counts, included costs, FIFO and weighted-average costing, and the rule that inventory is reported at the lower of cost and net realisable value, not simply at its expected selling price.
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