During 2014, Pretenders Furniture Company purchases a carload of wicker chairs.
ID: 2481786 • Letter: D
Question
During 2014, Pretenders Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pretenders for a lump sum of $65,000 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.
During 2014, Pretenders sells 150 lounge chairs, 120 armchairs, and 170 straight chairs.
What is the amount of gross profit realized during 2014? What is the amount of inventory of unsold straight chairs on December 31, 2014?
Gross profit realized during 2014 $_________ ?
Type No. of Chairs Estimated Selling Price Lounge Chairs 500 $122 Armchairs 200 108 Straight chairs 800 68Explanation / Answer
Chairs No.of chairs Sales Price Total sale price Relative sale price Total cost Cost Allocated to Chairs Cost per chair Lounge chairs 500 $ 122 $ 61,000 $ 61,000/ $ 137,000 X $ 65,000 $ 28,942 $ 57.88 Armchairs 200 $ 108 $ 21,600 $ 21,600/ $ 137,000 X $ 65,000 $ 10,248 $ 51.24 Straight chairs 800 $ 68 $ 54,400 $ 54,400/ $ 137,000 X $ 65,000 $ 25,810 $ 32.26 $ 1,37,000 $ 65,000 Chairs No of chairs sold Cost per chair Cost of chairs sold Sales Gross Profit Lounge chairs 150 $ 57.88 $ 8,682.48 $ 18,300 $ 9,617.52 Armchairs 120 $ 51.24 $ 6,148.91 $ 12,960 $ 6,811.09 Straight chairs 170 $ 32.26 $ 5,484.67 $ 11,560 $ 6,075.33 $ 22,503.94 Inventory of unsold straight chairs (800 - 170 ) x $ 32.26 = $ 20,325.55
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