Exercise 9-10 During 2017, Bridgeport Furniture Company purchases a carload of wicker chairs. The manufacturer sells...

Exercise 9-10

During 2017, Bridgeport Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Bridgeport for a lump sum of $55,000 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

Type	No. of Chairs	Estimated Selling Price Each
Lounge chairs	500	$90
Armchairs	400	80
Straight chairs	800	50

During 2017, Bridgeport sells 200 lounge chairs, 100 armchairs, and 140 straight chairs.

What is the amount of gross profit realized during 2017? What is the amount of inventory of unsold straight chairs on December 31, 2017?

Expert Solution

	Number of chairs	value of chairs	value assigned to individual chairs	COST PER chair
Lounge chairs	500	500*90= 45000	55000*45000/117000= 21154	21154/500 =$ 42.308
Armchairs	400	400*80=32000	55000*32000/117000= 15043	15043/400=$ 37.6075
straight chairs	800	800*50= 40000	55000*40000/117000= 18803	18803/800= 23.50375
		117000

a)Gross Profit : unit sold [price -cost]

[200(90-42.308)]lounge + [100(80-37.6075)]arm +[140(50-23.50375)]

9538.4+ 4239.25+ 3709.475

= $ 17487.125 [rounded to 17487.13]

b)amount of inventory of unsold straight chairs on December 31, 2017 = [800-140]*23.50375

= $ 15512.475 [rounded to 15512.48]

ekkarill92 answered 1 year ago

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