Determine the cost of goods sold and the cost of the ending inventory using the

Question

Determine the cost of goods sold and the cost of the ending inventory using the average cost formula.

Calculate Blue Furniture’s gross profit and gross profit margin for the month of June.

Blue Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June 1, of 520 bookcases at a cost of $132 each. During June, the company had the following purchases and sales of bookcases:
Purchases Sales Date Units Unit cost Units Unit price June 6 1,210 $134 10 1,020 $188 14 1,880 135 16 1,540 193 26 950 136

Explanation / Answer

Average ccost method

Sales $488980 [(1020 * $188 )+(1540 * $193)]

Cost of goods sold ($343291)

Gross profit $145689

Gross profit margin 29.79% ($145689 / $488980).

Date Cost of goods available for sale Cost of goods sold Ending inventory June 1 Beginning inventory 520 units * $132 = $68640 520 units * $132 = $68640 6 1210 units * $134 = $162140 1730 units * $133.3988 = $230780 10 1020 units * $133.3988 = $136067 710 units * $133.3988 = $94713 14 1880 units * $135 = $253800 2590 units * $134.5610 = $348513 16 1540 units * $134.5610 = $207224 1050 units * $134.5610 = $141289 26 950 units * $136 = $129200 2000 units * $135.2445 = $270489 Cost of goods sold = $343291 Ending inverntory = $270489

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