Applying the Cost of Goods Sold Model Shippington Sales sells a single product.

Question

Applying the Cost of Goods Sold Model

Shippington Sales sells a single product. At the beginning of the year, Shippington had 120 units in stock at a cost of $6 each. During the year, Shippington purchased 850 more units at a cost of $6 each and sold 210 units at $13 each, 250 units at $15 each, and 360 units at $14 each.

Required:

1. Using the cost of goods sold model, what is the amount of ending inventory and cost of goods sold?

2. What is Shippington's gross margin for the year?
$

Applying the Cost of Goods Sold Model

Shippington Sales sells a single product. At the beginning of the year, Shippington had 120 units in stock at a cost of $6 each. During the year, Shippington purchased 850 more units at a cost of $6 each and sold 210 units at $13 each, 250 units at $15 each, and 360 units at $14 each.

Required:

1. Using the cost of goods sold model, what is the amount of ending inventory and cost of goods sold?

2. What is Shippington's gross margin for the year?
$

Explanation / Answer

cost of goods sold opening stock+purchases - closing stock opening stock 120 6 720 purchases 850 6 5100 less cost of goods sold 820 6 4920 value of closing inventory 150 6 900 gross margin 210 13 2730 250 15 3750 360 14 5040 TOTAL SALES REVENUE 11520 COST OF GOODS SOLD 4920 GROSS MARGIN 6600

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