### Inventory Analysis for Alpha CompanyThe information presented below was extracted from the inventory records of Alpha Company as of December, Year 2.- **Beginning Inventory (purchased in Year 1)**: - 560 units at $5 each- **Purchases Made in Year 2**: - 1,160 units at $8 each- **Units Sold**: - 1,260 units at $12 each#### Problem Statement:Determine the amount of the gross margin shown on the Year 2 income statement assuming Alpha uses a weighted average cost flow method.**Note**: Round intermediate calculations to the nearest cent.#### Multiple Choice Options:1. $1,1602. $6,2753. $8,8454. $1,400### Explanation:To solve this, we need to calculate the weighted average cost per unit, the cost of goods sold (COGS), and then determine the gross margin.1. **Calculate Weighted Average Cost:** - Total units = 560 + 1,160 = 1,720 units - Total cost = (560 units × $5) + (1,160 units × $8) = $2,800 + $9,280 = $12,080 - Weighted average cost per unit = $12,080 / 1,720 units2. **Calculate COGS:** - COGS = Weighted average cost per unit × Units sold3. **Calculate Gross Margin:** - Gross Margin = Sales Revenue - COGS - Sales Revenue = Units sold × Selling price per unitUsing these steps will help determine the correct gross margin amount from the given options.

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Description: ### Inventory Analysis for Alpha CompanyThe information presented below was extracted from the inventory records of Alpha Company as of December, Year 2.- **Beginning Inventory (purchased in Year 1)**: - 560 units at $5 each- **Purchases Made in Y

The weighted average method in inventory calculates the average cost of items by considering both…

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The following Information was drawn from the Inventory records of Alpha Company as of December, Year 2. Beginning inventory (purchased in Year 1) Purchases made in Year 2 560 units@ $5 each. 1,160 units@ $8 each 1,260 units @ $12 each Units sold Which of the following the amount of the gross margin shown on the Year Income statement assuming Alpha uses a weighted average cost flow method? Note: Round Intermediate calculations to the nearest cent. Multiple Choice O O O O $1,160 $6,275 $8,845 $1,400

The following Information was drawn from the Inventory records of Alpha Company as of December, Year 2. Beginning inventory (purchased in Year 1) Purchases made in Year 2 560 units@ $5 each. 1,160 units@ $8 each 1,260 units @ $12 each Units sold Which of the following the amount of the gross margin shown on the Year Income statement assuming Alpha uses a weighted average cost flow method? Note: Round Intermediate calculations to the nearest cent. Multiple Choice O O O O $1,160 $6,275 $8,845 $1,400

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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