Question

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Date Transaction Number of Units Per Unit Total
Apr. 3 Inventory 48 52525,200
8 Purchase 96 63060,480
11 Sale 64 1,750112,000
30 Sale 40 1,75070,000
May 8 Purchase 80 70056,000
10 Sale 48 1,75084,000
19 Sale 24 1,75042,000
28 Purchase 80 77061,600
June 5 Sale 48 1,84088,320
16 Sale 64 1,840117,760
21 Purchase 144 840120,960
28 Sale 72 1,840132,480

What is the total cost of purchases made by Dunne Co. during the three-month period?
1) $60,480
2) $117,760
3) $120,960
4) $182,040

Answer 1

The total cost of purchases made by Dunne Co. during the three months is $240,960.

Step-by-step explanation:

Dunne Co.'s total cost of purchases can be determined by summing the costs of each purchase transaction during the three months. The formula to calculate the total cost is:

`\[ \text{Total Cost} = \sum (\text{Number of Units} * \text{Per Unit Cost}) \]`

Let's calculate it step by step:

1. April 8 Purchase: \(96 \times \$630 = \$60,480\)

2. May 8 Purchase: \(80 \times \$700 = \$56,000\)

3. May 28 Purchase: \(80 \times \$770 = \$61,600\)

4. June 21 Purchase: \(144 \times \$840 = \$120,960\)

Adding these amounts together:

`\[ \$60,480 + \$56,000 + \$61,600 + \$120,960 = \$240,960 \]`

Therefore, the total cost of purchases made by Dunne Co. during the three months is $240,960.

In summary, the total cost is obtained by multiplying the number of units purchased by the cost per unit for each transaction and then summing these values. In this case, the purchases from April, May, and June are considered, resulting in a total cost of $240,960. This calculation ensures an accurate representation of the total expenses incurred by Dunne Co. in acquiring merchandise during the specified three-month timeframe.