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18 November, 01:11

Hoover Company purchased two identical inventory items. The item purchased first cost $45.50. The item purchased second cost $50.75. Then Hoover sold one of the inventory items for $70. Based on this information, the amount of:

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  1. 18 November, 01:19
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    The gross margin is $21.875

    Explanation:

    I think your question is missed of key information, allow me to add in and hope it will fit the original one.

    Based on this information, the amount of gross margin is:

    My answer:

    Given that:

    first cost $45.50 second cost $50.75 one of the inventory items for $70

    When using the weighted average method, you divide the cost of goods available for sale for the number of units available for sale, which brought the average cost weighted for each unit.

    => Weighted Cost = (44.5x 1) + (50.75 x 1) ] / 2 = $48.125

    => Gross margin is: Sell price - Weighted Cost

    $70 - $48.125 = $21.875
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