A company sells 1,200 units during the first quarter of the year at a selling price of $25 per unit. In addition, the company has a beginning inventory of 600 units that were purchased at $10 per unit, and the following purchases and sales.
Date Units sold Units purchased Cost per unit
January 10 300 $11
January 25 450
February 7 400 $12
February 14 200
March 5 300 $14
March 27 550
If the company uses a periodic inventory system and the weighted average cost method of inventory valuation, then what is the company's gross profit?
| a. |
$15,125 |
|
| b. |
$16,275 |
|
| c. |
$17,325 |
|
| d. |
$18,300 |
|
| e. |
$13,725 |
Answer : B = $ 16,275
:: Weighted Average Cost Method - Periodic Inventory
>> Cost of Goods available for sale = $ 18,300.
>> No.of Goods are available for sale = 600 + 300 + 400 + 300
>> No.of Goods are available for sale = 1600
>> Average cost per unit = $ 18,300 / 1,600
>> Average cost per unit = $ 11.4375.
>> Cost of Goods sold = 1200 * $ 11.4375
>> Cost of Goods sold = $ 13,725.
>> Sales = 1200 * $ 25
>> Sales = $ 30,000.
>> Gross Profit = $ 30,000 - $ 13,725
>> Gross Profit = $ 16,275
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