Question

In 2018, ABC Co., a drone manufacturing company started the year with 25 drones in inventory...

In 2018, ABC Co., a drone manufacturing company started the year with 25 drones in inventory and manufactured 65 drones during the year. In 2019, the company started the year with 10 drones and manufactured 110 drones within the year. Ending inventory in 2019 was 30 drones. For both years, the cost to manufacture one drone was $250 and the retail price for each drone was $500.

Calculate the following: a) Number of products sold in 2019 (0.5 pt) answer: __________

b) COGS (in $) in 2018 (1 pt) answer: __________

c) Gross profit (in $) in 2019 (1 pt) answer: __________

d) Increase in gross profit from 2018 to 2019, in % (1.5 pts) answer: __________

2018 2019 Beginning inventory ________ units ________ units

Production (additions to inventory) ________ units ________ units

Sales (removals from inventory) ________ units ________ units

Ending inventory ________ units ________ units

Business   Accounting   
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Answer #1

Let's solve one by one

a) number of products sold in 2019

= opening stock + manufactured - closing stock

=10 + 110 - 30 = 90

b) To find COGS first we have to find the number of products sold in 2018

applying same formula of above gives

Number of products sold = 25 + 65 -10 = 80

Cost of manufacture of one drone = $250

COGS in 2018 =80*250 = $20000

c) gross profit = sales - COGS

Sales in 2018 = 90 * 500 = $45000

COGS = 90 *250 = $22500

Gross profit in 2019 = $22500

d) gross profit in 2018 = sales - COGS

= (80*500) -(80*250) = 40000 - 20000 = $20000

Gross profit in 2019 = $22500

Increase in gross profit = 22500 -20000 =2500

%of increase =(2500/20000)*100 =12.5 %

Particulars 2018 2019
Beginning inventory 25 10
Production 65 110
Sales 80 90
Closing inventory 10 30
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