Chapter 4 Assignment Question 4 velue: 500 points Sprint Shoes Inc had a beginin

Question

Chapter 4 Assignment Question 4 velue: 500 points Sprint Shoes Inc had a begining inventory of 9,850 units on January 1,20X1. The costs associated with the inventory were Material Labor $ 12.00 pe unit 700 per unit 5.10 per unit During 20X1, the firm produced 44200 units with the following costs Material Labor Overhead $ 17 50 per unit 8.80 per unit 10.30 per unit Sales for the year wore 47,590 units at $42 60 each Sprint Shoes uses LIFO accounting a. What was the gross profitc? (Do not round intermedjate calculations) prott b. What was the vakue of ending inventory? (Do not round intermediate calculations.) inventory Hints References eBook & Resources Hint.e1 O Type here to search

Explanation / Answer

a. Gross Profit $ 3,27,915 Working: a.Calculation of cost of goods sold LIFO stands for last-in-first-out.It means inventory bought in last is sold first. Cost of goods sold of 47,590 units is as follows: 44200 units =        44,200 x (17.50+8.80+10.30) = $       16,17,720 3390 units           3,390 x (12.00+7.00+5.10) = $             81,699 47590 units        47,590 $       16,99,419 b. Calculation of gross profit Sales      47,590 x $    42.60 = $       20,27,334 Less:Cost of goods sold $       16,99,419 Gross Profit $          3,27,915 b. Ending Inventory $ 1,55,686 Working: a. Cost of goods available for sale 44200 units =        44,200 x (17.50+8.80+10.30) = $       16,17,720 9850 units           9,850 x (12.00+7.00+5.10) = $          2,37,385 54050 Units        54,050 $       18,55,105 b. Cost of ending inventory Cost of goods available for sale $       18,55,105 Less:Cost of goods sold $       16,99,419 Cost of ending inventory $          1,55,686

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