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DThe Blake e Group Me Netflix "kosu D241 o Express DAK y Twitter . Deco er KSU MyKSu n Facebook 0 YouTube P PandoraBan ne Ch 56 Help Save & Exit Su Stubbs Company uses the perpetual inventory method. On January 1, Year 1, Stubbs purchased 950 units of inventory that cost $750 each. On January 10, Year 1, the company purchased an additional 600 units of inventory that cost $5.00 each. If Stubbs uses a weighted average cost flow method and sells 1,300 units of inventory for $15.00 each, the amount of gross margin reported on the income statement will be: (Round your intermediate calculations to two decimal places.) Multiple Choice $11,754 $11,011 $15,625 e to search

Explanation / Answer

Calculation of Gross Margin

Step 1 - Purchases = (950*$7.5) + (600*$5) = $10125

Average Rate = $10125/(950+600) = $6.5322

Step 2 - Cost of Sales = (1300*$6.5322) = $8492

Step 3 - Sales = ($1300*$15) = $19500

Step 4 - Gross Margin = ($19500 - $8492) = $11008

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