Question

ABC Company employs a periodic inventory system and sells its inventory to customers
for $27 per unit. ABC Company had the following inventory information available for
the month of May:

May 1    Beginning inventory 2,400 units @ $14 cost per unit
May 8    Sold 1,400 units
May 13   Purchased 1,100 units @ $11 cost per unit
May 18   Sold 1,200 units
May 21   Purchased 1,300 units @ $17 cost per unit
May 28   Sold 300 units
May 30   Purchased 700 units @ $10 cost per unit

During May, ABC Company reported operating expenses of $14,500 and had an income tax
rate of 34%.

Calculate the amount of gross profit shown on ABC Company's income statement for May
using the weighted average method.

Answer 1

Calculate cost of goods sold :

Beginning inventory (2400*14)	33600
May 13 Purchase (1100*11)	12100
May 21 Purchase (1300*17)	22100
May 30 purchase (700*10)	7000
Total cost of goods available for sale	74800
Total units available	5500
Average cost per unit	13.6 per unit
Cost of goods sold (2900*13.6)	39440

Gross profit = Sales-Cost of goods sold

                = (2900*27)-39440

Gross profit = 38860