10 Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company
ID: 2567797 • Letter: 1
Question
10 Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company uses a periodic inventory system and the LIFO cost method for its grill inventory. Cast Iron's December 31, 2018, fiscal year-end inventory consisted of the following (listed in chronological order of acquisition): 0.5 points Units 5,800 4,400 6,800 Unit Cost $ 300 400 500 eBook The replacement cost of the grills throughout 2019 was $600. Cast Iron sold 31,000 grills during 2019. The company's selling price is set at 200% of the current replacement cost. Print Required: 1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 under two different assumptions. First, that Cast Iron purchased 32,000 units and, second, that Cast Iron purchased 17,000 units during the year. 4. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 assuming that Cast Iron purchased 32,000 units (as per the first assumption) and 17,000 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method. References Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 4 Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 under two different assumptions. First, that Cast Iron purchased 32,000 units and, second, that Cast Iron purchased 17,000 units during the year. (Round "Gross profit ratio" answer to 1 decimal place (i.e., 0.123 needs to be entered as 12.3%.)) Purchased Units Gross Profit Gross Profit Ratio 32,000 $ 18,600,000 50.0 % 17,000Explanation / Answer
*Selling price = 200% of replacement cost
= 600 * 200%
= 1200
*Gross profit ratio = Gross profit / sales * 100
Ans. 1 Sales (31,000 * 1200) 37200000 Less: Cost of goods sold(31,000 * 600) 18600000 Gross profit 18600000 Ans. 2 Sales (31,000 * 1200) 37200000 Less: Cost of goods sold 16200000 Gross profit 21000000 *Calculation of cost of goods sold: 17000 * 600 10200000 6800 * 500 3400000 4400 * 400 1760000 2800 * 300 840000 31000 16200000 Purchased units Gross profit Gross profit ratio 32000 18,600,000 50% 17000 21,000,000 56.5% Ans 4 Sales (31,000 * 1200) 37200000 Less: Cost of goods sold 15300000 Gross profit 21900000 Calculation of cost of goods sold: 5800 * 300 1740000 4400 * 400 1760000 6800 * 500 3400000 14000 * 600 8400000 31000 15300000 Purchased units Gross profit Gross profit ratio 32000 21900000 58.9% 17000 21900000 58.9% If only 17000 units are purchased cost of goods sold, gross profit and the gross profit ratio will be same as when 32000 units are purchased.Related Questions
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