Question

FindMe Inc., (FI) has developed a coin-sized tracking tag that attaches to key rings, wallets, and other items and can be prompted to emit a signal using a smartphone app. FI sells these tags, as well as water-resistant cases for the tags, with terms FOB shipping point. Assume FI has no inventory at the beginning of the month, and it has outsourced the production of its tags and cases. FI uses FIFO and has entered into the following transactions:

Jan.	2:		FI purchased and received 230 tags from Xioasi Manufacturing (XM) at a cost of $8 per tag, n/15.
Jan.	4:		FI purchased and received 40 cases from Bachittar Products (BP) at a cost of $3 per case, n/20.
Jan.	6:		FI paid cash for the tags purchased from XM on Jan. 2.
Jan.	8:		FI mailed 130 tags via the U.S. Postal Service (USPS) to customers at a price of $32 per tag, on account.
Jan.	11:		FI purchased and received 330 tags from XM at a cost of $11 per tag, n/15.
Jan.	14:		FI purchased and received 130 cases from BP at a cost of $4 per case, n/20.
Jan.	16:		FI paid cash for the cases purchased from BP on Jan. 4.
Jan.	19:		FI mailed 90 cases via the USPS to customers at a price of $13 per case, on account.
Jan.	21:		FI mailed 230 tags to customers at a price of $32 per tag.

2. Calculate the dollars of gross profit and the gross profit percentage from selling tags and cases.
3. Which product line yields more dollars of profit?
4. Which product line yields more profit per dollar of sales?

Answer 1

Calculation of Cost of gooda sold: Tags

Cost of Goods available for sale

Cost of goods sold

Closing Inventory

Date	Units	Cost/unit	Amount	Units	Cost/unit	Amount	Units	Cost/unit	Amount
Jan 2	230	$8	$1,840	130	$8	$1,040
				100	$8	$800
Jan 11	330	$11	$3,630	130	$11	$1,430	200	11	$2,200
Total	560		$5,470	360		$3,270	200	11	$2,200

Calculation of Cost of gooda sold: Cases

Cost of Goods available for sale

Cost of goods sold

Closing Inventory

Date	Units	Cost/unit	Amount	Units	Cost/unit	Amount	Units	Cost/unit	Amount
Jan 4	40	$3	$120	40	$3	$120
Jan 14	130	$4	$520	50	$4	$200	80	$4	$320
Total	170		$640	90		$320	80	$4	$320

Calculation of Profits

	Tags	Cases
Sales (A)	(130+230)*32 = $11,520	90*13 = $1,170
Cost of Goods sold (B)	(From the above working) $3,270	(From the above working) $320
Gross Profits (A - B)	$8,250	$850
Gross Profit % (Gross Profit /Sales) * 100	71.61%	72.65%

Product line yielding more dollars of profit is Tags

Product line yielding more more profit per dollar of sales is Cases