Question

On May 1, 2022, Skysong, Inc. had beginning inventory consisting of 250 units with a unit cost of $6. During May, the company purchased inventory as follows:

▪ 490 units at $6
▪ 740 units at $7

The company sold 1230 units during the month for $10 per unit. Skysong, Inc. uses the average cost method. Skysong, Inc.'s gross profit for the month of May is:______

Answer 1

Gross profit = $4,305

Step-by-step explanation:

The average cost per unit is the total cost of the goods available for sale divided by the total units of goods available

Average cost per unit=

= (250× 6) + (490 × 6) + (740 at $7 )/ (250 +490 + 740)

=$6.5

Cost of golds sold = 1,230 ×6.5 = 7995

Gross profit = Sales Revenue - Cost of goods sold

= (1230 × 10) - 7,995

= $4,305