Weighted Average Cost Method for Inventory Valuation

Steps:

• Determine total cost of available inventory: beginning (20 units × $8 =$160) + purchase (40 units × $5 =$200) = $360.
• Calculate total units available: 20 + 40 = 60 units.
• Compute weighted average cost per unit: $360 ÷ 60 =$6.
• Find cost of units issued: 55 × $6 =$330.

Why C is correct:

• The weighted average cost method assigns the average unit cost (total cost of goods available ÷ total units available) to units issued, yielding $330 here.

Why the others are wrong:

• A. $255: Errors by ignoring beginning inventory cost and using only purchase price for 51 units.
• B. $270: Miscalculates average as about$4.91, perhaps by incorrect weighting of costs.
• D. $345:Overst$6.27, possibly by assuming higher purchase price.

Final answer: C