Question

The Bradley Corporation produces a product with the following costs as of July 1, 20X1: Material $1 per unit Labor 3 per unit Overhead 2 per unit Beginning inventory at these costs on July 1 was 3,550 units. From July 1 to December 1, 20X1, Bradley Corporation produced 13,100 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 Corporation sold 15,200 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?

Answer 1

Answer

--Requirement [a]
Gross Profit = Sales - Cost of Goods Sold
= (15200 units x $ 19) - 196000
= 288800 - 196000
= $ 92,800

--Requirement [b]
Ending Inventory = $ 8700

--Workings

	Units	Unit Cost	Value
Beginning Inventory	3,550	$1+$3+$2 = $ 6	$21,300
Current production	13,100	$ 5 + $ 4 + $ 5 = $ 14	$183,400
	16,650		$204,700
Units sold:
>From current production	13,100	$14	$183,400
>From beginning inventory	2,100	$6	$12,600
	15,200		$196,000 COST OF GOODS SOLD
Ending Inventory	1,450	$6	$8,700