Use the following information for questions:
A company had the following inventory activity during May: $\begin{array}{lrrrr}&\text { Units}&\text { Unit Cost }&\text {Total Cost }&\text { Unit Price }\\hline
\text { Beginning inventory } & 100 & \$ 20.00 & \$ 2,000 & \
\text { Purchase: May 3 } & 900 & \$ 21.00 & 18,900 & \
\text { Sale: May 5 } & (900) & & & \$ 30.00 \
\text { Purchase: May 15 } & 1,000 & \$ 21.00 & 21,000 & \
\text { Sale: } & (900) & & & \$ 30.00
\end{array}$
-If the company uses a perpetual system and the moving average cost flow assumption, what is the gross margin on the May 5 sale closest to?
A)$6,100
B)$8,100
C)$8,190
D)$8,550

Question

Quizplus · Accepted Answer

The gross margin on the May 5 sale, using the moving average cost flow assumption under a perpetual system, is calculated as follows:1. Calculate the moving average cost before the May 5 sale:   - Beginning inventory: 100 units at $20.00 each = $2,000   - Purchase on May 3: 900 units at $21.00 each = $18,900   - Total units before May 5 sale = 100 + 900 = 1,000 units   - Total cost before May 5 sale = $2,000 + $18,900 = $20,900   - Moving average cost per unit = $20,900 / 1,000 units = $20.902. Calculate the cost of goods sold (COGS) for the May 5 sale:   - 900 units sold at an average cost of $20.90 = $18,8103. Calculate the sales revenue for the May 5 sale:   - 900 units sold at $30.00 each = $27,0004. Calculate the gross margin:   - Gross margin = Sales revenue - COGS = $27,000 - $18,810 = $8,190Therefore, the gross margin on the May 5 sale is closest to $8,190.

Use the Following Information for Questions: a Company Had the Following

Use the Following Information for Questions:
a Company Had the Following