R Ltd. produces a product with the following costs as of July 1, 20XX:MaterialLabourOverhead$5 per unit7 per unit5 per unitAssuming R sold 26,000 units during the last six months of the year at $22 each, beginning inventory at these costs on July 1 was8,000 units. From July 1 to December 31, 20XY, R produced 20,000 units. These units had a material cost of $6 per unit. The costs forlabour and overhead were the same.a. If R uses FIFO inventory accounting, what would be the gross profit for the period?Gross profitb. If R uses FIFO inventory accounting, What is the value of ending inventory?Ending inventory

Name: R Ltd. produces a product with the following costs as of July 1, 20XX
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Description: R Ltd. produces a product with the following costs as of July 1, 20XX:MaterialLabourOverhead$5 per unit7 per unit5 per unitAssuming R sold 26,000 units during the last six months of the year at $22 each, beginning inventory at these costs on July 1

The inventory method, which is to be used, is the FIFO method of inventory accounting.The cost of…

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a. If R uses FIFO inventory accounting, what would be the gross profit for the period? Gross profit $ b. If R uses FIFO inventory accounting, What is the value of ending inventory? Ending inventory $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

R Ltd. produces a product with the following costs as of July 1, 20XX:
Material
Labour
Overhead
$5 per unit
7 per unit
5 per unit
Assuming R sold 26,000 units during the last six months of the year at $22 each, beginning inventory at these costs on July 1 was
8,000 units. From July 1 to December 31, 20XY, R produced 20,000 units. These units had a material cost of $6 per unit. The costs for
labour and overhead were the same.
a. If R uses FIFO inventory accounting, what would be the gross profit for the period?
Gross profit
b. If R uses FIFO inventory accounting, What is the value of ending inventory?
Ending inventory

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Similar questions

24. Which of the following is the same as 'net realisable value' of inventory? a. proceeds of sale less all further marketing, selling and distribution costs b. average cost c. gross selling price d. replacement price
Using the following letters to represent items: P = purchases (net) C = cost of good sold B = Begining inventory E = Ending inventory Which equation is correct? a. B - C + P = E b. B - E = C + P c. P - E = B + C d. B = C - E + P
54. To calculate a beginning or ending inventory ($ amount): The appropriate Inventory quantity x Inventory cost Inventory ($ amount) OA. True OB. False
4. What would be the net income if the perpetual inventory system had been used?
Inventory should be measured at lower of fair value and net realizable value of the inventory. Select one: True O False
2. When Inventory is sold, how is the cost of goods sold account affected? Briefly explain
B2.
1.Which of the following may not result to the amount of cost of sales? a.Net purchases less net increase in inventory b.Net decrease in inventory plus net purchases c.Total goods available for sale less beginning inventory d.Total goods available for sale less ending inventory
What is the effect on the cost of goods sold, gross profit, and net income if ending merchandise inventory is understated?
The inventory costinf method that best matches current costs with the current revenues is the 1) specific identificarion method 2) fifo method 3) lifo method 4) weighted average method 5) net method
The answer is d, ex In a period of rising prices, the inventory method which tends to report the lowest inventory is a. FIFO. b. LISH. c. Specific identification. d. Average - cost.
On the basis of the data shown below: Item InventoryQuantity Cost perUnit Market Value per Unit(Net Realizable Value) A13Y 144 $22 $27 TX24 274 11 7 Determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item, as shown in Exhibit 9.