Question

6 Convex Mechanical Supplies produces a product with the following costs as of July 1,20X1 Material Labor Overhead4 $7 9.09 polnts $13 eBook Beginning inventory at these costs on July 1 was 9,400 units. From July 1 to December 1, Convex produced 22,500 units. These units had a material cost of $8 per unit. The costs for labor and overhead were the same. Convex uses FIFO inventory accounting a. Assuming that Convex sold 24,500 units during the last six months of the year at $16 each, what would gross profit be? Hint Gross profit 58,400 Print References b. What is the value of ending inventory? Ending inventory

Answer 1

Cost per unit of Beginning Inventory:
Material			7
Labour			2
Overheads			4
Cost per unit of Beginning Inventory:			13
Cost per unit of Current Production:
Material			8
Labour			2
Overheads			4
Cost per unit of Current Production:			14
Ending inventory of FG:
Beginning inventory units			9400
Add: Units produced			22500
Total units available			31900
Less: Units sold			24500
Ending inventory units			7400
Multiply: Cost per unit			14
(at current cost per unit due to FIFO)
Ending inventory value			103600
Cost of goods sold:
Beginning inventory (9400*13)			122200
Add: Produced (22500*14)			315000
Total cost			437200
Less: Ending inventory			103600
Cost of goods sold:			333600
Req 1.
Gross Profit:
Sales revenue (24500*16)			392000
Less: Cost of goods sold			333600
Gross Profit:			58400
Req 2.
Ending inventory of FG:
Beginning inventory units			9400
Add: Units produced			22500
Total units available			31900
Less: Units sold			24500
Ending inventory units			7400
Multiply: Cost per unit			14
(at current cost per unit due to FIFO)
Ending inventory value			103600