Convex Mechanical Supplies produces a product with the following costs as of Jul
ID: 2639662 • Letter: C
Question
Convex Mechanical Supplies produces a product with the following costs as of July, 1 2012:
Beginning inventory at these costs on July 1 was 5,000 units. From July 1 to Deceber 1, Convex produced 15,000 units. These units had a material cost of $10 per unit . The costs for labor and overhead were the same. Convex uses FIFO inventory accounting.
Assuming the Convex sold 17,000 units during the last six months of the year at $20 each, what would gross profit be? What is the value ending inventory?
material $6 labor 4 overhead 2 $12Explanation / Answer
Gross profit calculation
Revenue= 17000units*$20=340000
Cost =5000units*$12=$6000 and 12000units*$16=192000
GP=Sales -COGS=340000-60000-192000=$88000
closing inventory=3000unit*$16=$48000.