Sprint Shoes Inc. had a beginning inventory of 9,700 units on January 1, 20X1. The costs associated with the inventory were: Material $ 14.00 per unit Labor 9.00 per unit Overhead 6.10 per unit During 20X1, the firm produced 43,900 units with the following costs: Material $ 14.50 per unit Labor 6.80 per unit Overhead 7.30 per unit Sales for the year were 47,530 units at $39.60 each. Sprint Shoes uses LIFO accounting. a. What was the gross profit? b. What was the value of ending inventory?
Sprint Shoes Inc. had a beginning inventory of 9,700 units on January 1, 20X1. The costs associated with the inventory were: Material $ 14.00 per unit Labor 9.00 per unit Overhead 6.10 per unit During 20X1, the firm produced 43,900 units with the following costs: Material $ 14.50 per unit Labor 6.80 per unit Overhead 7.30 per unit Sales for the year were 47,530 units at $39.60 each. Sprint Shoes uses LIFO accounting. a. What was the gross profit? b. What was the value of ending inventory?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sprint Shoes Inc. had a beginning inventory of 9,700 units on January 1, 20X1. The costs associated with the inventory were:
Material $ 14.00 per unit
Labor 9.00 per unit
Overhead 6.10 per unit
During 20X1, the firm produced 43,900 units with the following costs:
Material $ 14.50 per unit
Labor 6.80 per unit
Overhead 7.30 per unit
Sales for the year were 47,530 units at $39.60 each. Sprint Shoes uses LIFO accounting.
a. What was the gross profit?
b. What was the value of ending inventory?
Expert Solution
Step 1
The inventory valuation is based on the flow of inventory. The LIFO method says that recently purchased units should be issued first.
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