Reguly Company buys transformers from manufacturers and sells them to utility companies. The units are costly, and
Question:
Reguly Company buys transformers from manufacturers and sells them to utility companies. The units are costly, and the company keeps track of them by using serial numbers. On April 1, the company had two transformers in stock:
Serial Number ______________________ Unit Cost
2010901 ......................................$55,000
2010905 ...................................... 59,200
During the month, the company purchased the following two transformers:
Serial Number ______________________ Unit Cost
20101001 ....................................$51,000
20101002 .................................... 56,800
Reguly Company sold two transformers-serial numbers 2010901 and 20101002-during the month of April. The selling price of the transformers was $90,000 per unit.
Required
1. Reguly Company uses the specific-unit-cost method for costing inventory. Why would the company prefer to use this method?
2. Compute the gross margin for Reguly Company for the month of April.
Step by Step Answer:
Accounting Volume 1
ISBN: 978-0132690096
9th Canadian edition
Authors: Charles T. Horngren, Walter T. Harrison, Jo Ann L. Johnston, Carol A. Meissner, Peter R. Norwood