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

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

Quizplus · Accepted Answer

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

Total cost of goods available for sale: 
Beginning inventory (1,000 units x $8 per unit) = $8,000 
Purchases (5,000 units x $9 per unit) = $45,000

Total cost of goods available for sale = $53,000

Total units available for sale: 
Beginning inventory (1,000 units) 
Purchases (6,000 units)

Total units available for sale = 7,000 units

Weighted-average cost per unit = Total cost of goods available for sale / Total units available for sale

Weighted-average cost per unit = $53,000 / 7,000 units = $7.57

Since we have a physical count of 4,000 units and we know the cost per unit is $7.57, we can calculate the cost of goods sold:

Cost of goods sold = 4,000 units x $7.57 per unit = $30,280

To calculate the gross profit, we subtract the cost of goods sold from the sales revenue:

Sales revenue = 4,000 units x $13 per unit = $52,000 
Gross profit = $52,000 - $30,280 = $21,720

Finally, to calculate the net income, we need to multiply the gross profit by (1 - tax rate):

Net income = $21,720 x (1 - 0.20) = $17,376

Therefore, the weighted-average cost per unit is $7.57 and the answer is (C) $8.24 (rounded up to the nearest cent).

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