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  • Average Cost (AVCO) Method

     
    Average Cost (AVCO) Method
     

    Average cost method (AVCO) calculates the cost of ending inventory and cost of goods sold for a period on the basis of weighted average cost per unit of inventory. Weighted average cost per unit is calculated using the following formula:

    Weighted Average  =  Total Cost of Inventory
    Unit Cost Total Units in Inventory

    Like FIFO and LIFO methods, AVCO is also applied differently in periodic inventory system and perpetual inventory system. In periodic inventory system, weighted average cost per unit is calculated for the entire class of inventory. It is then multiplied with number of units sold and number of units in ending inventory to arrive at cost of goods sold and value of ending inventory respectively. In perpetual inventory system, we have to calculate the weighted average cost per unit before each sale transaction.

    The calculation of inventory value under average cost method is explained with the help of the following example:

    Example

    Apply AVCO method of inventory valuation on the following information, first in periodic inventory system and then in perpetual inventory system to determine the value of inventory on hand on Mar 31 and cost of goods sold during March.

    Mar 1 Beginning Inventory 60 units @ $15.00 per unit
    5 Purchase 140 units @ $15.50 per unit
    14 Sale 190 units @ $19.00 per unit
    27 Purchase 70 units @ $16.00 per unit
    29 Sale 30 units @ $19.50 per unit

    Solution

    AVCO Periodic

    Units Available for Sale = 60 + 140 + 70 = 270
    Units Sold = 190 + 30 = 220
    Units in Ending Inventory = 270 − 220 = 50
           
    Weighted Average Unit Cost Units Unit Cost Total
    Mar 1 Inventory 60 $15.00 $900
    Mar 5 Purchase 140 $15.50 $2,170
    27 Purchase 70 $16.00 $1,120
      270 * $15.52 $4,190
    * $4,190 ÷ 270      
           
    Cost of Goods Sold 220 $15.52 $3,414
    Ending Inventory 50 $15.52 $776

    AVCO Perpetual

    Date Purchases Sales Balance
    Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
    Mar 1             60 $15.00 $900
    5 140 $15.50 $2,170       60 $15.00 $900
                  140 $15.50 $2,170
                  200 $15.35 $3,070
    14       190 $15.35 $2,916 10 $15.35 $154
    27 70 $16.00 $1,190       10 $15.35 $154
                  70 $16.00 $1,120
                  80 $15.92 $1,274
    29       30 $15.92 $478 50 $15.92 $796
    31             50 $15.92 $796

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  • 原文地址:https://www.cnblogs.com/sunsoftware/p/4330136.html
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