Question

​Kentucky, Inc. purchases and sells widgets. The following information summarizes the​company's operating activities for the​year:
Selling and Administrative Expenses

$5,400

Purchases

156,000

Sales Revenue

783,000

Merchandise​ Inventory, January 1

2,500

Merchandise​ Inventory, December 31

38,200

If the company sold 7,100 units of widgets during the​ year, how much is the cost for one​ widget? (Round your answer to the nearest​ cent.)

Answer 1

Answer:

$16.9 per widget

Explanation:

Given that,

Beginning inventory = $2,500

Purchases  = $156,000

Ending inventory = $38,200

Sales Revenue = $783,000

Selling and Administrative Expenses = $5,400

Total cost of the 7,100 widgets:

= Beginning inventory + Purchases - Ending inventory

= $2,500 + $156,000 - $38,200

= $120,300

Therefore,

Cost of one widget = Total cost of the 7,100 widgets ÷ Number of widgets

                                = $120,300 ÷ 7,100

                                = $16.9 per widget