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 May 8 May 13 May 18 May 21 May 28 May 30 Beginning inventory 2,400 units @ $14 cost per unit Sold 1,000 units Purchased 1,300 units @ $17 cost per unit Sold 1,200 units Purchased 1,100 units @ $11 cost per unit Sold 300 units Purchased 700 units @ $10 cost per unit During May, ABC Company reported operating expenses of $14,500 and had an income tax rate of 438. Calculate the amount of gross profit shown on ABC Company's income statement for May using the weighted average method. Enter answer

Answer 1

Under periodic method, the records are maintained and updated at the end of the period

Weighted average cost perf unit = Total cost of goods available/Total Units Available

= (2400*14 + 1300*17+1100*11+700*10)/(2400+1300+1100+700)

= $13.6 per unit

Gross profit = Sales – Cost of goods sold

= (1000+1200+300)*27 – 13.6*2500

= $33,500