Worked-example setupScope and assumptions
- Cedar Trail is fictional, and the rights, cutoff, qualifying costs, event order, and removals are supplied for calculation practice.
- All units are interchangeable members of one cost pool and use one unit of measure.
- The schedule retains full precision and rounds only displayed dollar amounts.
- Period
- One inventory period
- Units
- Inventory units and US dollars
- Rounding
- Carry full precision; display dollars to cents
Compute the periodic rate once
Cedar begins with 20 units at $15, buys 30 at $18, sells 25, buys 10 at $24, and sells 15. Goods available contain 60 units costing $1,080. Forty units sell, and 20 remain.
Periodic weighted average uses the complete period:
$1,080 ÷ 60 units = $18 per unit
Cost of goods sold is 40 × $18 = $720. Ending inventory is 20 × $18 = $360. The cost check is $720 + $360 = $1,080.
Recompute the moving rate after each purchase
After the first purchase, Cedar has 50 units costing $840. This produces a $16.80 moving rate. Cedar assigns $420 to the first 25-unit sale, leaving 25 units and $420.
The second purchase adds 10 units and $240. Its new pool is 35 units costing $660, or $18.857142857 per unit. Cedar assigns $282.857142857 to the 15-unit sale. Moving-average cost of goods sold is therefore $702.86 at display precision. Ending inventory is $377.14.
The cost check uses unrounded amounts: $702.857142857 + $377.142857143 = $1,080. The periodic method includes the late $24 purchase in one full-period
rate. The moving method cannot use that purchase for the earlier sale.
Complete the independent Northstar average-cost practice. US-GAAP support for the average cost-flow assumption appears in ASC 330-10-30-9.
Verified calculation · inventory cost flow analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- events
- 4 items
Inspect data
[
{
"kind": "purchase",
"unit_cost": 18,
"units": 30
},
{
"kind": "sale",
"unit_cost": null,
"units": 25
},
{
"kind": "purchase",
"unit_cost": 24,
"units": 10
},
{
"kind": "sale",
"unit_cost": null,
"units": 15
}
]- opening layers
- 1 field
Inspect data
{
"opening_units": {
"unit_cost": 15,
"units": 20
}
}Recomputed result
| Measure | Value |
|---|---|
| ending units | 20 |
| goods available cost | 1,080 |
| goods available units | 60 |
| periodic weighted average cost of goods sold | 720 |
| periodic weighted average ending inventory | 360 |
| periodic weighted average unit cost | 18 |
| perpetual moving average cost of goods sold | 702.8571 |
| perpetual moving average ending inventory | 377.1429 |
| perpetual moving average ending unit cost | 18.8571 |
| units sold | 40 |