In: Finance
Sprint Shoes Inc. had a beginning inventory of 9,350 units on January 1, 20X1. The costs associated with the inventory were: Material $ 12.00 per unit Labor 7.00 per unit Overhead 5.10 per unit During 20X1, the firm produced 43,200 units with the following costs: Material $ 13.50 per unit Labor 5.80 per unit Overhead 6.30 per unit Sales for the year were 47,390 units at $39.60 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
Answer:
Unit Product Cost = Direct Materials + Direct Labor + Overhead Cost
Cost of Beginning
Inventory:
Unit Product Cost = $12.00 + $7.00 + $5.10
Unit Product Cost = $24.10
Cost of Beginning Inventory = 9,350 * $24.10
Cost of Beginning Inventory = $225,335
Cost of New
Production:
Unit Product Cost = $13.50 + $5.80 + $6.30
Unit Product Cost = $25.60
Cost of Beginning Inventory = 43,200 * $25.60
Cost of Beginning Inventory = $1,105,920
Cost of Goods available for Sale = $225,335 + $1,105,920
Cost of Goods available for Sale = $1,331,255
Units Sold = 47,390 Units
Cost of Goods Sold = (43,200 * $25.60) + (4,190 * $24.10)
Cost of Goods Sold = $1,206,899
Sales = 47,390 * $39.60
Sales = $1,876,644
Gross Profit = Sales – Cost of Goods Sold
Gross Profit = $1,876,644 - $1,206,899
Gross Profit = $669,745
Value of Ending Inventory = Cost of Goods available for Sale-
Cost of Goods Sold
Value of Ending Inventory = $1,331,255 - $1,206,899
Value of Ending Inventory = $124,356