An organization follows the Weighted-Average method of inventory valuation. You are appointed as a cost accountant of the organization and a task has been assigned to fix the selling price of a product such that the gross margin percentage is set at its target of 40%. The estimated total cost of units completed and removed from Work-in-Progress (WIP) Inventory is $60,000. The estimated number of units to be completed is 5,000. What selling price should you fix?

Question

Quizplus · Accepted Answer

Under the Weighted-Average method, the Cost per Unit = Total Cost of Units Completed and Removed from WIP Inventory/ Units Completed this Period = $60,000/ 5,000 Units = $12.00 per Unit
 11ee941a_b6ed_4ef6_bdb6_dfb32db891e6_TBW1041_00 X = Selling Price per Unit = $12 per Unit × (100%/60%) = $20.00

An Organization Follows the Weighted-Average Method of Inventory Valuation