Weighted average cost (AVCO) for closing inventory valuation Steps:

• Total units purchased: 1000 + 800 = 1800 units.
• Total purchase cost: (1000 × $12) + (800 ×$14.50) = $12,000 +$11,600 = $23,600.
• Average cost per unit: $23,600 ÷ 1800 ≈$13.11.
• Closing units: 1800 - 1200 = 600; value = 600 × $13.11 ≈$7867 (AVCO cost, lower than NRV of $24/unit). Why C is correct:
• AVCO formula (total cost ÷ total units) × closing units gives the cost-based value of $7867, per IAS 2 inventory valuation at lower of cost or NRV. Why the others are wrong:
• A. $21600 uses first purchase cost for all units, ignoring weighted average.
• B. $21773 likely misapplies FIFO or erroneous averaging.
• D. $38400 applies NRV to incorrect unit quantity (1600 units). Final answer: C