Question

Sprint Shoes Inc. had a beginning inventory of 9,150 units on January 1, 20X1. The costs associated with the inventory were:

Material	$ 13.00 per unit
Labor	8.00 per unit
Overhead	6.10 per unit

During 20X1, the firm produced 42,800 units with the following costs:
  

Material	$ 15.50 per unit
Labor	7.80 per unit
Overhead	8.30 per unit

Sales for the year were 47,310 units at $42.60 each. Sprint Shoes uses LIFO accounting.

a. What was the gross profit? (Do not round intermediate calculations.)
  

b. What was the value of ending inventory? (Do not round intermediate calculations.)
  

Answer 1

		Part - (a)	Sprint Shoes, Inc.
			Particulars			Amount ($)
			Sales (47,310*42.6)			2,015,406
			Cost of goods sold
			New inventory
			Units (15.5+7.8+8.3)	42,800
			Cost per unit	31.60
			Total		1,352,480
			Old inventory
			Units (47,310-42,800)	4,510
			Cost per unit (13+8+6.1)	27.10
			Total		122,221
			Total cost of goods sold			1,474,701
			Gross profit			540,705
		Part - (b)	Value of ending inventory
			Beginning inventory (9,150*27.1)	247,965
			Add : Total Production	1,352,480
			(42,800*31.6)
			Total inventory available for sale	1,600,445
			Less : Cost of goods sold	1,474,701
			Ending inventory	125,744