Precious, Inc. is a merchandiser of a single line of golden rings. At the beginn

Question

Precious, Inc. is a merchandiser of a single line of golden rings. At the beginning of the day, the shop had 10 rings in its inventory. During the day, 4 new rings were delivered to the shop. By close of business, only 8 rings remained in inventory. The purchase price of each ring from the supplier is S280. In addition, the company pays S5 for shipping and delivery insurance on each ring that they purchase. What is the company's Gross Profit for the day if it sells each ring for $654? The Gross Profit for the day isS

Explanation / Answer

Answer:

Beginning Inventory = 10 Rings
Units Sold = 4 Rings
Ending Inventory = 8 Rings
Ending Inventory = Beginning Inventory + Purchases – Units sold
8 = 10 + Purchases – 4
Purchases = 2 Rings

Selling Price per unit = $654
Cost of each ring = $280 + $5 = $285
Sales = $654 * 4 = $2,616
Cost of Rings Sold = 4 * $285 = $1,140

Gross Profit = Sales – Cost of Ending Inventory
Gross Profit = $2,616 - $1,140
Gross Profit = $1,476

Therefore, the Gross Profit for the day is $1,476.

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