Question

In: Accounting

60. At May 1, 2017, Vaughn Manufacturing had beginning inventory consisting of 310 units with a...

60.

At May 1, 2017, Vaughn Manufacturing had beginning inventory consisting of 310 units with a unit cost of $7.0. During May, the company purchased inventory as follows:

▪ 610 units at $7.0
▪ 920 units at $8.0
The company sold 1530 units during the month for $12.0 per unit. Vaughn Manufacturing uses the average cost method. The value of Vaughn Manufacturing's inventory at May 31, 2017 is

$2170.

$2325.

$13800.

$2480.

61. At May 1, 2017, Blue Spruce Corp. had beginning inventory consisting of 350 units with a unit cost of $8.0. During May, the company purchased inventory as follows:

▪ 700 units at $8.0
▪ 1040 units at $9.0
The company sold 1740 units during the month for $14.0 per unit. Blue Spruce Corp. uses the average cost method. Blue Spruce Corp.'s gross profit for the month of May is

$24360.

$14790.

$9570.

$17760.

Solutions

Expert Solution

Answer-60)- The value of Vaughn Manufacturing's inventory at May 31, 2017 is = $2325.

Explanation- Value of Vaughn Manufacturing's inventory at May 31, 2017 = Ending inventory units*Average cost per unit

= (1840 units-1530 units)*$7.5 per unit

= 310 units*$7.5 per unit

= $2325

Where- Average cost per unit = Total cost of inventory/ Total no. of unit

= {(310 units*$7.0 per unit)+ (610 units*$7.0 per unit)+ (920 units*$8.0 per unit)} /(310 units+610 units+920 units)

= ($2170+$4270+$7360)/1840 units

= $13800/1840 units

= $7.5 per unit

Answer-61)- Blue Spruce Corp.'s gross profit for the month of May is= $9570.

Explanation- Gross profit for the month of May is = Total sale amount- Cost of goods sold

= (1740 units*$14.0 per unit) – (1740 units*$8.50 per unit)

= $24360-$14790

= $9570

Where- Average cost per unit = Total cost of inventory/ Total no. of unit

= {(350 units*$8.0 per unit)+ (700 units*$8.0 per unit)+ (1040 units*$9.0 per unit)} /(350 units+700 units+1040 units)

= ($2800+$5600+$9360)/2090 units

= $17760/2090 units

= $8.50 per unit

ekkarill92 answered 1 year ago

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