Question

(relative sales value method) during 2025, pretenders furniture company purchases a carload of wicker chairs. the manufacturer sells the chairs to pretenders for a lump sum of $59,850 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. three types of chairs are included in the carload. the three types and the estimated selling price for each are listed below. type no. of chairs estimated selling price each lounge chairs 400 $90 armchairs 300 80 straight chairs 700 50 during 2025, pretenders sells 200 lounge chairs, 100 armchairs, and 120 straight chairs. instructions what is the amount of gross profit realized during 2025?

Answer 1

The amount of gross profit realized during 2025 can be calculated by subtracting the cost of the chairs sold from the total sales revenue.

Step-by-step explanation:

The amount of gross profit realized during 2025 can be calculated by subtracting the cost of the chairs sold from the total sales revenue. The cost of the chairs can be found by multiplying the number of each type of chair sold by their respective purchase prices. The total sales revenue can be found by multiplying the number of each type of chair sold by their respective selling prices. Using the given information:

• Lounge chairs: 200 sold x $90 each = $18,000
• Armchairs: 100 sold x $80 each = $8,000
• Straight chairs: 120 sold x $50 each = $6,000

The total sales revenue is $18,000 + $8,000 + $6,000 = $32,000. The cost of the chairs is $19,980. Therefore, the gross profit realized during 2025 is $32,000 - $19,980 = $12,020.