A hospital was out of juice at the end of September. They bought 200 cases on October 1 at $10/each and 200 more cases on November 1 at $12. There were 100 cases left at the end of October. What is the total of the first scare expensed on November 2nd?
To calculate the total expense for the first batch of juice, we need to determine how many cases were sold in October, as well as the cost per case.
Starting with 400 cases bought (200 on October 1 and 200 on November 1), and given that there were 100 cases left at the end of October, we can calculate that 300 cases were sold in October (400 - 100).
To find the cost per case, we consider the purchase prices. The first 200 cases were bought at $10 each, and the next 200 cases were bought at $12 each. We can create a weighted average to account for these two different prices.
The weighted average is calculated by multiplying the number of cases at each price point by their respective prices, then summing the values and dividing by the total number of cases.
For the first batch:
- The cost of the 200 cases bought at $10 each is $10 * 200 = $2000
- The cost of the 200 cases bought at $12 each is $12 * 200 = $2400
The total cost of both batches is $2000 + $2400 = $4400.
Next, we need to determine the expense for the first batch specifically on November 2nd. To do this, we need to know the hospital's accounting method. There are two common accounting methods: accrual basis and cash basis.
Under the accrual basis, expenses are recognized when goods are received, regardless of payment timing. If using this method, the expense would be recognized when the cases were received on October 1. Therefore, the expense is $4400.
Under the cash basis, expenses are recognized only when the payment is made. If using this method, we would need to determine when the hospital actually paid for the first batch. If they paid for it on November 2nd, then the expense on November 2nd would also be $4400.
In summary, if the hospital uses the accrual basis or paid for the first batch on November 2nd using the cash basis, the total expense for the first batch on November 2nd would be $4400.