Question

WE CAN Submit Cox Corporation produces a product with the following costs as of July 1, 20XX: Material Labour Overhead $4 per unit 6 per unit 4 per unit Assuming Cox sold 22,000 units during the last six months of the year at $23 each, beginning inventory at these costs on July 1 was 6,000 units. From July 1 to December 31, 20XY, Cox produced 21.000 units. These units had a material cost of $5 per unit. The costs for labour and overhead were the same. a. If Cox uses FIFO Inventory accounting, what would be the gross profit for the period? Gross profit $ b. If Cox uses FIFO inventory accounting. What is the value of ending inventory? Ending inventory [ Activate Windows

Answer 1

a) compute Gross profit under fifo method

   gross profit= sales - cost of goods sold

Sales=22000 units × $23 = $506000

Cost of goods sold= beginning inventory {6000units×(4+6+4)}= 6000units× $14 =$84000

units produced {16000units ×(5+6+4)}=16000units ×$15= $240000

$84000+$240000=$324000

GROSS PROFIT= $506000 - $324000= $182000

b) compute ending inventory under fifo method

   Ending inventory= beginning INVENTORY+ units produced- units sold

   = 6000+21000-22000= 5000units

5000units × $15= $75000

ending inventory under FIFO METHOD =$75000

   All the best

   Any doubt please comment below

Thank you