moving average inventory method

Dictionary of Accounting Terms for: moving average inventory method
moving average inventory method

method used under a perpetual inventory systemwhich requires that a new weighted average cost must be calculated aftereachpurchase. The new weighted average is computed in the same way as in the weighted average inventory method: that is, the average cost is the cost of the

The moving average costs are computed as follows:

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March 1, beginning inventory 100 units @ $10 $1000
March 10, purchases 80 @ $11 880
March 10, balance 180 @ $10.44 $1880
March 18, sales 90 @ $10.44 940
March 18, balance 90 @ $10.44 $ 940
March 20, purchases 70 @ $12 840
March 20, balance 160 @ $11.125 $1780
March 27, sales 50 @ $11.125 556
March 30, balance 110 @ $11.125 $1224
Cost of goods sold (140 units) $940 + $556 $1496
Ending inventory (110 units @ $11.125) $1224