5. 2.50 points The Bradley Corporation produces a product with the following cos

Question

5. 2.50 points The Bradley Corporation produces a product with the following costs as of July 1, 20x1: Labor 3 per unit 1 per unit Beginning inventory at these costs on July 1 was 3,850 units. From July 1 to December 1, 20X1, Bradley produced 13,700 units. These units had a material cost of $5, labor of $4, and overhead of $5 per unit. Bradley uses LIFO inventory accounting. a. Assuming that Bradley sold 16,400 units during the last six months of the year at $19 each, what is its gross profit? b. What is the value of ending inventory?

Explanation / Answer

Ans.1 a Gross Profit 100900 *Calculation: Sales (16400 * 19) 311600 Less: cost of goods sold 13700 * (5+4+5) 191800 (16400-13700) * (3+3+1) 18900 Total cost of goods sold 210700 Gross Profit 100900 b Ending inventory = Available for sale - cost of goods sold 218750 - 210700 8050 *Available for sale: Beginning inventory 3850 * (3+3+1) 26950 Produced 13700 * (5+4+5) 191800 218750 Ans.2 Cost of goods sold: 18450 *Calculation: Units Rate Amount 1150 15 17250 100 12 1200 1250 18450 Ans.3 Simpson Glove Company Cash Receipts Shedule Jan Feb March April May June July August Credit sales 41000 39000 47000 56000 38000 53000 64000 68000 In month of sale (35%) 16450 19600 13300 18550 22400 23800 One month after sale (25%) 9750 11750 14000 9500 13250 16000 Two months after sale (30%) 12300 11700 14100 16800 11400 15900 Total cash receipts 38500 43050 41400 44850 47050 55700 One month after sale (25%): Month of sale (35%) Month of receipt Feb. March March April April May May June June July July August Two months after sale (30%) Month of sale (35%) Month of receipt Jan March Feb. April March May April June May July June August

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