Weighted Average Method

Explanation

Under the weighted average method, inventory is priced at the average cost of the goods available for sale (Beginning inventory plus purchases during the period).

The weighted average method is a method used to calculate the cost of merchandise sold. It assumes that the cost of merchandise sold should be calculated using the average price of inventory items.

In the weighted average method, the cost of goods available for sale is divided by the total number of units available for sale to obtain the average cost per unit. This average cost per unit is then multiplied by the number of units sold to calculate the cost of merchandise sold.

Let's break down the options and determine which one aligns with the weighted average method:

A. Average price of beginning inventory plus purchases during the period: This option suggests adding the average price of beginning inventory (which is not specifically related to the weighted average method) to the purchases during the period. This does not align with the weighted average method because it doesn't consider the average cost per unit.

B. Average price per unit of ending inventory: This option suggests using the average price per unit of the ending inventory to calculate the cost of merchandise sold. This is not consistent with the weighted average method, as it focuses on the ending inventory rather than considering the entire period's cost.

C. Average price of ending inventory plus purchases during the period: Similar to option B, this option combines the average price of the ending inventory with the purchases during the period. Again, this does not align with the weighted average method, as it overlooks the average cost per unit.

D. Average price per unit of beginning inventory: This option states that the cost of merchandise sold should be calculated using the average price per unit of the beginning inventory. This is consistent with the weighted average method because it considers the average cost per unit. The weighted average method takes into account the average cost per unit of both beginning and ending inventory, along with any purchases made during the period.

Therefore, the correct answer is D. Average price per unit of beginning inventory.