Question

Stubbs Company uses the perpetual inventory method. On January 1, Year 1, Stubbs purchased 1,400 units of inventory that cost $12.00 each. On January 10, Year 1, the company purchased an additional 600 units of inventory that cost $7.25 each. If Stubbs uses a weighted average cost flow method and sells 1,600 units of inventory for $24.00 each, the amount of gross margin reported on the income statement will be: (Round your intermediate calculations to two decimal places.)

Answer 1

Answer:

Gross Profit                                 $ 23,253

Explanation:

Stubbs Company

Perpetual Inventory Method

Date                      Purchases        Unit Price          Total Cost

January 1,              1,400 units         $12.00            $16,800

January 10,            1,600 units          $7.25             $11,600

Total                        3000                                        28,400

Weighted Average Cost= 28,400/3000= $ 9.467

Sales  1,600 units at$24.00 =$38,400

COGS 1600 units  at $ 9.467 =   $ 15,147

Gross Profit                                 $ 23,253

The amount of gross margin reported on the income statement will be:    $ 23,253