In one month, a part had an opening inventory of 100 units (unit cost ¥1,000); on the 10th, 200 units were purchased at ¥1,300 each; on the 15th, 150 units were issued; on the 20th, 100 units were purchased at ¥1,400 each; and on the 25th, 150 units were issued. Which is the value of the ending inventory under the moving average method?

Answer: B. ¥128,000

Under the moving average method, the average unit cost is recalculated after every purchase by dividing the total inventory value by the quantity. After the purchase on the 10th it is (100,000 + 260,000) ÷ 300 = ¥1,200, and after issuing 150 units on the 15th, 150 units worth ¥180,000 remain. After the purchase on the 20th it is (180,000 + 140,000) ÷ 250 = ¥1,280, so the 100 units left after the issue on the 25th are worth 1,280 × 100 = ¥128,000. Under the first-in, first-out (FIFO) method, the oldest units are assumed to be issued first, so the 100 units left are those bought on the 20th, worth ¥140,000; when purchase prices are rising, FIFO gives the higher inventory value.

• A. This is the periodic (weighted) average method, which values inventory at the average unit cost of ¥1,250 over all receipts for the month, including the opening inventory.
• B. Correct. The average unit cost is recalculated after every purchase.
• C. This is the value under the first-in, first-out (FIFO) method.