Question

Marigold Company's inventory records show the following data: Units Unit Cost Inventory, January 1 10000 $9.20...

Marigold Company's inventory records show the following data:

Units

Unit Cost

Inventory, January 1

 10000 $9.20

Purchases:     June 18

 8000 8.00

                     November 8

 6000 6.00


A physical inventory on December 31 shows 4300 units on hand. Marigold sells the units for $11 each. The company has an effective tax rate of 20%. Marigold uses the periodic inventory method. The weighted-average cost per unit is

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Answer #1

Calculation of cost of goods available for sale:

A B A x B
Units Unit Cost Total Cost
Jan .1 10,000 $9.20 $92,000
June.18 8,000 $8.00 $64,000
Nov.8 6,000 $6.00 $36,000
24,000 $192,000

Cost of goods available for sale = $192,000

Number of units available for sale = 24,000

weighted-average cost per unit = Cost of goods available for sale/ Number of units available for sale

= 192,000/24,000

= $8

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