Eneri Company's inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. The weighted-average cost per unit is
A) $8.00.
B) $8.01.
C) $8.24.
D) $9.30.

Question

Eneri Company's inventory records show the following data:  A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. The weighted-average cost per unit is
A) $8.00. 
B) $8.01. 
C) $8.24. 
D) $9.30.

Quizplus · Accepted Answer

To find the weighted-average cost per unit, we need to divide the total cost of goods available for sale by the total number of units available for sale.

Total cost of goods available for sale = (2,000 units x $7.50 per unit) + (6,000 units x $8.50 per unit) = $59,000

Total number of units available for sale = 2,000 units + 6,000 units = 8,000 units

Weighted-average cost per unit = Total cost of goods available for sale ÷ Total number of units available for sale
= $59,000 ÷ 8,000 units
= $7.375 per unit

Since we rounded the cost to the nearest cent, the weighted-average cost per unit is $7.38 per unit.

Now, we can calculate the cost of goods sold and the gross profit.

Cost of goods sold = Weighted-average cost per unit x Number of units sold
= $7.38 per unit x 4,000 units
= $29,520

Gross profit = Sales revenue - Cost of goods sold
= $52,000 - $29,520
= $22,480

Finally, we need to calculate the net income by subtracting taxes from the gross profit.

Net income = Gross profit x (1 - Effective tax rate)
= $22,480 x (1 - 0.20)
= $17,984

Therefore, the weighted-average cost per unit is $7.38 per unit, and the best choice is C) $8.24, which is the closest option.

Eneri Company's Inventory Records Show the Following Data: a Physical