At May 1, 2018, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 800 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. Kibbee's gross profit for the month of May is

Question

Quizplus · Accepted Answer

To calculate the average cost per unit: [(200 units * $7) + (800 units * $7) + (600 units * $8)] / 1600 units = $7.50 per unit. The cost of goods sold for 1,000 units is 1,000 * $7.50 = $7,500. Sales revenue is 1,000 * $12 = $12,000. Gross profit is $12,000 - $7,500 = $4,500.

At May 1, 2018, Kibbee Company Had Beginning Inventory Consisting