Sunland Company has the following inventory data: July 1 Beginning inventory 72 units at $19 $1368 7 Purchases 252 units at $20 5040 22 Purchases 36 units at $22 792 $7200 A physical count of merchandise inventory on July 30 reveals that there are 120 units on hand. Using the average cost method, the value of ending inventory is:

Ending inventory at average cost=  $2400

Explanation:

Sunland Company

Date            Particulars        Units          Unit Cost          Total Cost

July 1      Beginning inventory 72            $19                       $1368

7 July                 Purchases        252            $20                      5040

22 July             Purchases          36               $22                    792  

Total                                         360                                                 $7200

30 June  Ending Inventory 120 units

Average Cost= $7200/360= $20

Ending inventory at average cost= 120 units at $20= $2400

We divide the total cost with the total number of units to get  the average cost. We multiply the average cost with the ending inventory units to get the vale of ending inventory at average cost.