Weighted Average Cost Analysis Using Excel

Completing this activity will help you learn to:

1. analyze the cost of inventory items based on the weighted-average method.
2. create a re-usable spreadsheet by using calculations with cell references.
3. create spreadsheets that incorporate conditional logic to facilitate calculations.

Case scenario: You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month.

Required:

Download spreadsheet WeightedAverageCostAnalysisCaseData-e52afd.xlsx

You are to build a spreadsheet that can calculate the new inventory cost and the weighted-average cost, when a new purchase or sale record is added to the table.