Question

The weighted-average cost method is used by Gomez, Inc. Sales are $320,000, the number of units available for sale is 100, the number of units sold during the period is 75, and the weighted-average cost of the goods available for sale is $800 each. How much is gross profit for the company

Answer 1

Answer:

Gross profit = $260,000

Explanation:

The gross profit is the profit earned directly after subtracting the direct cost of goods sold from the sales revenue.

The cost of goods sold represents the cost of inputs associated with units sold. They are direct cost which are incurred wholly and specifically on the goods sold. They exclude overhead and other indirect costs.x

Direct costs include direct material cost , direct labour cost and direct expenses

The gross profit  can be determined using the relationship below

Gross profit = Sales revenue - cost of goods sold.

Cost of goods sold = $800  × 75 = 60,000

Gross profit = $320,000 - 60,000= $260,000

Gross profit = $260,000