Question 6 5 pts ABC Company employs a periodic inventory sy

Question 6 5 pts ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Compan y had the following inventory information available for the month of Ma y: May 1 Beginning inventory 1,400 units $12 cost per unit May 8 Sold 1,100 units May 13 Purchased 1,800 units $21 cost per unit May 18 Sold 1,000 units May 21 Purchased 1,600 units $15 cost per unit May 28 Sold 750 units May 30 Purchased 1,200 units $20 cost per unit During May, ABC Company reported operatin g expenses of $5,000 and had an income tax rate of 36% Calculate the amount of gross profit earn ed by ABC Company during May using the weighted average method

Solution

Units Unit cost Total Beginning inventory 1400 12 16800 13-May 1800 21 37800 21-May 1600 15 24000 30-May 1200 20 24000 Total 6000 102600 Average cost = 102600/6000= $17.1 Units sold = 1100+1000+750= 2850 Gross Profit = 2850*(23-17.1)= $16815