Time Left:1:27:32 Myeisha Reese: Attempt 1 Save 21 Question 31 (1.66 points) At

Question

Time Left:1:27:32 Myeisha Reese: Attempt 1 Save 21 Question 31 (1.66 points) At May 1, 2014, Heineken Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 24 400 units at $7 600 units at $8 The company sold 1,000 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is 1) $4,500 2) $7,500 3) $9,000 4) $12,000 28 Save 34 Previous Page Next Page Page 4 of 8 n 27 Saved

Explanation / Answer

Answer : 1) $4,500

          Total Inventory cost =(200*$7)+(400*$7)+(600*$8)

                                               = $1,400+$2,800+$4,800)

                                               =$9,000

             Total inventory cost = $9,000

                 Total Number of units = 200+400+600

                                                         = 1200

             Average cost = Total inventory cost/ Total Number of units

                                      = $9,000/1200

                                      =$7.5

              Gross profit = $1,000*(12-7.5)

                                    = $4,500

         Gross profit for the month of may =$4,500

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