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

Gross Profit $ 23,253

Step-by-step 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