When the weighted average method is used, ending inventory units are priced at the
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A. B. C. D.C
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).
When the weighted average method is used to calculate the cost of ending inventory, the ending inventory units are priced at the average cost per unit. Therefore, the correct answer is option C: average price.
The weighted average method calculates the average cost per unit by dividing the total cost of goods available for sale (beginning inventory + purchases) by the total number of units available for sale (beginning inventory units + purchased units).
Here's a step-by-step explanation of how the weighted average method works:
Determine the total cost of goods available for sale: This includes the cost of the beginning inventory and any purchases made during the period.
Count the total number of units available for sale: This includes the units in the beginning inventory and the units purchased during the period.
Divide the total cost of goods available for sale by the total number of units available for sale: This gives you the average cost per unit.
Multiply the average cost per unit by the number of units in ending inventory: This gives you the value of the ending inventory.
By using the average cost per unit, the weighted average method assumes that all units have the same cost regardless of when they were acquired. This simplifies the inventory valuation process by avoiding the need to track specific costs associated with individual units.
To summarize, when the weighted average method is used, ending inventory units are priced at the average cost per unit (option C).