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Inventory Records Widget Tek’s original accountant accepted a position with another firm and left in early March. You have been asked to review the subsidiary inventory ledger record for Widget Tek’s main product for March:

Date Quantity Unit Cost Total Cost
Mar. 1 850 $98.00 $83,300
1,275 $95.00 $121,125
Mar. 8 650 $98.00 $63,700
Mar. 11 325 $98.00 $31,850
Mar. 14 325 $98.00 $31,850
780 $103.00 $80,340
Mar. 22 260 $98.00 $25,480
Mar. 25 260 $98.00 $25,480
1,900 $100.00 $190,000

Study the inventory record for March and answer the questions that follow.

a. Assuming that the product sells for $170 and that 80% of sales are on account, determine the gross profit from sales for March.
b. Making the same assumptions as in (1), determine the ending inventory cost for March.

Answer :

akindeleot

Answer:

A) If the product sells for $165 and that 70% of sales are on account, the gross profit from sales for March is $ 299,080.00

B) The ending inventory cost for March is $ 183,880.00

Explanation:

1) Calculation of Gross Profit

                                      Units Rate     Amount

Sale                         4465 $ 165.00    $736,725.00

Cost of Goods Sold                      $ 437,645.00

Gross Profit                                     $ 299,080.00

2) Calculation of Ending inventory

Mar. 25 260      $98.00 $25,480.00

              1600      $99.00 $158,400.00

              1860                  $183,880.00

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