ICANManagement InformationMaterial, Labour and Overhead Costing2021

Adeola Manufacturing Company uses the weighted average method of inventory valuation. At the beginning of March 2024, it held 400 units of raw material at ₦1,200 per unit. During March, it purchased 600 units at ₦1,500 per unit and issued 700 units to production. What is the value of closing inventory?

A₦360,000
B₦390,000
C₦414,000CORRECT
D₦450,000
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Why the answer is C, and why the others tempt you.
Opening stock: 400 units × ₦1,200 = ₦480,000. Purchases: 600 units × ₦1,500 = ₦900,000. Total: 1,000 units worth ₦1,380,000. Weighted average cost per unit = ₦1,380,000 ÷ 1,000 = ₦1,380. Closing inventory = (1,000 − 700) = 300 units × ₦1,380 = ₦414,000.
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