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    ldybrd's Avatar
    ldybrd Posts: 1, Reputation: 1
    New Member

    Aug 12, 2007, 10:43 PM
    FIFO Calcuating Gross Profit and Ending Inventory
    Bradley Corp produces a product with the following costs as of July 1, 2007:

    Material: $2 per unit; Labor $4 per unit: Overhead: $2 per unit

    Beginnning inventory: at these costs on July 1st, was 3000 units.
    From July 1 - Dec 1, 2007, Bradley produced 13,000 units.

    These units had: Material: $3 per unit; Labor $5 per unit: Overhead: $3 per unit.

    Bradley uses FIFO inventory accounting.

    Assuming that Bradley sold 13,000 units during the last six months of the year @ $16 each,

    What is the gross profit?

    What is the value of the ending inventory?
    ms180sx's Avatar
    ms180sx Posts: 64, Reputation: 6
    Junior Member

    Dec 20, 2007, 11:05 PM
    using the first in first out method, 3000 units @ cost of $8, sold at 16 is $8 profit/unit (8 x 3000 is 24000.

    the next 10K is made at $11, sold at 16, therefore 5/unit profit. (5 x 10000 = 50,000)

    total profit should be A+B, or 24K+50K= 74000..

    if bradley produced 3K, then 13K and sold 13K using fifo, 3K at second cost remains in inventory. 3K x 11/unit cost is 33000( COG)
    if they sell at 16, potential is 48000.

    double check what they value inventory as, either cog or income potential..

    hope was helpful and correct.

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