At May 1, 2011, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $ € 3.50 $. During May, the company purchased inventory as follows:

200 units at $ € 3.50 $
300 units at $ € 4.00 $

The company sold 500 units during the month for $ € 6 $ per unit. Deitrich uses the average cost method. Deitrich's gross profit for the month of May is

Question

At May 1, 2011, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $ € 3.50 $. During May, the company purchased inventory as follows:

200 units at $ € 3.50 $
300 units at $ € 4.00 $

The company sold 500 units during the month for $ € 6 $ per unit. Deitrich uses the average cost method. Deitrich's gross profit for the month of May is

Quizplus · Accepted Answer

The average cost per unit is calculated as follows:(100 units x €3.50) + (200 units x €3.50) + (300 units x €4.00) / 600 units = €3.75Gross profit is calculated as follows:(500 units x €6) - (500 units x €3.75) = €1,125

At May 1, 2011, Deitrich Company Had Beginning Inventory Consisting €3.50 € 3.50 €3.50

At May 1, 2011, Deitrich Company Had Beginning Inventory Consisting $€ 3.50$