Question

The Bradley Corporation produces a product with the following costs as of July 1, 2011:

Material $4 per unit
Labor 2 per unit
Overhead 2 per unit
Beginning inventory at these costs on July 1 was 3,650 units. From July 1 to December 1, 2011, Bradley Corporation produced 13,300 units. These units had a material cost of $2, labor of $4, and overhead of $2 per unit. Bradley uses LIFO inventory accounting.
a. Assuming that Bradley Corporation sold 15,600 units during the last six months of the year at $13 each, what is its gross profit?

Answer 1

$78,000

Step-by-step explanation:

For computing the gross profit, first we have to compute the cost of good sold which is shown below:

= Beginning inventory units × total units + (sale units - beginning inventory units) × total units

= 3,650 units × $8 per unit + (15,600 units - 3,650 units) × $8 per unit

= $29,200 + $95,600

= $124,800

Now the gross profit would be

= Sale units × total units - Cost of goods sold

=15,600 units × $13 - $124,800

= $78,000