Current Attempt in Progress

Crane Company's inventory records show the following data:

\begin{tabular}{llrr|}
& & [tex]$\underline{\text { Units }}$[/tex] & [tex]$\underline{\text { Unit Cost }}$[/tex] \\
\hline Inventory: January 1 & 10,000 & [tex]$\$[/tex] 10.00[tex]$ \\
Purchases: June 18 & 5,000 & $[/tex]\[tex]$ 8.00$[/tex] \\
& November 8 & 5,000 & [tex]$\$[/tex] 8.00[tex]$
\end{tabular}

A physical inventory on December 31 shows 4,000 units on hand. Crane sells the units for $[/tex]\[tex]$ 11$[/tex] each. The company has an effective tax rate of [tex]$18\%$[/tex]. Crane uses the periodic inventory method.

The weighted-average cost per unit is:

A. [tex]$\$[/tex] 9.00[tex]$
B. $[/tex]\[tex]$ 8.70$[/tex]
C. [tex]$\$[/tex] 8.85$



Answer :

Alright, let's work through this problem step-by-step to determine the weighted-average cost per unit for Crane Company's inventory.

1. Determine Total Units and Total Cost by Aggregating Inventory and Purchases:
- Start with the initial inventory and add the purchases throughout the year.
- Using the given data:
- January inventory: 10,000 units at \[tex]$10.00 each. - June purchases: 5,000 units at \$[/tex]8.00 each.
- November purchases: 5,000 units at \[tex]$8.00 each. 2. Calculate the Total Number of Units: \[ \text{Total units} = \text{January inventory units} + \text{June purchases units} + \text{November purchases units} \] \[ \text{Total units} = 10,000 + 5,000 + 5,000 = 20,000 \text{ units} \] 3. Calculate the Total Cost: \[ \text{Total cost} = (\text{January inventory units} \times \text{January inventory cost}) + (\text{June purchases units} \times \text{June purchases cost}) + (\text{November purchases units} \times \text{November purchases cost}) \] \[ \text{Total cost} = (10,000 \times 10.00) + (5,000 \times 8.00) + (5,000 \times 8.00) \] \[ \text{Total cost} = 100,000 + 40,000 + 40,000 = 180,000 \text{ dollars} \] 4. Calculate the Weighted-Average Cost per Unit: \[ \text{Weighted average cost per unit} = \frac{\text{Total cost}}{\text{Total units}} \] \[ \text{Weighted average cost per unit} = \frac{180,000}{20,000} = 9.00 \text{ dollars} \] 5. Select the Correct Weighted-Average Cost per Unit: - The choices given are \$[/tex]9.00, \[tex]$8.70, and \$[/tex]8.85.
- Based on our calculations, the weighted-average cost per unit is \[tex]$9.00. Thus, the correct weighted-average cost per unit is \$[/tex]9.00.