Problem 4-15 Gross profit and ending inventory [LO4-2] produces a product with t

Question

Problem 4-15 Gross profit and ending inventory [LO4-2] produces a product with the following costs as of July 1, 20X1: Material Labor Overhead S4 per unit 2 per unit 2 per unit Beginning inventory at these costs on July 1 was 3,400 units. From July 1 to December 1, 20X1 Bradley produced 12,800 units. These units had a material cost of $2, labor of $3, and overhead of $4 per unit. Bradley uses LIFO inventory accounting. a. Assuming that Bradley sold 14,600 units during the last six months of the year at $14 each, what is its gross profit? Gross profit b. What is the value of ending inventory? Ending inventory

Explanation / Answer

a)

b)

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Cost of goods sold Units rate amount sale from current year production    12,800 $2+$3+$4 = $9 $ 115,200 Sale form beginning inventory (14,600-12,800)      1,800 $4+$2+$2 = $8 $    14,400 Cost of goods sold    14,600 $ 129,600

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