Assume the amount of scrap is material and the scrap is sold immediately after it is produced. If the scrap attributable to a sp
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Answer:
Cost of merchandise purchase for May = $500,000
Explanation:
Provided information,
Sales for the month = $900,000
opening inventory = $50,000
Closing inventory = $55,000
Gross margin on sales = 45% of sales
Cost of goods sold = 100 - gross margin = 100 - 45% = 55%
Thus, cost of goods sold = $900,000 55% = $495,000
Therefore, purchase for the month = Cost of goods sold + Closing - Opening
= $495,000 + $55,000 - $50,000 = $500,000