Question

During 2020, Pronghorn Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pronghorn for a lump sum of $65,835 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below.

Type		No. of Chairs		Estimated Selling Price Each
Lounge chairs		440		$90
Armchairs		330		80
Straight chairs		770		50

During 2020, Pronghorn sells 220 lounge chairs, 110 armchairs, and 132 straight chairs.

What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)

Gross profit realized during 2020		$enter a dollar amount
Amount of inventory of unsold straight chairs		$enter a dollar amount

Answer 1

Answer:

Gross Profit Realized during 2020 = 13044

Amount of inventory of unsold straight chairs = (770- 132) x 28.75 = $18343

Calculations

Chairs	No. of Chairs	Sales price per chair	Total Sales price	Relative Sales price	Total Cost	Cost allocated	Cost per chair
Lounge Chairs	440	90	39600	39600/114500	65835	22769	51.75
Arm Chairs	330	80	36400	36400/114500	65835	20929	63.42
Straight Chairs	770	50	38500	38500/114500	65835	22137	28.75
Total =			114500			65835
Chairs	No. of Chairs	Cost per chair	Cost of chairs sold	Sales	Gross Profit
Lounge Chairs	220	51.75	11385	19800	8415
Arm Chairs	110	63.42	6976	8800	1824
Straight Chairs	132	28.75	3795	6600	2805
Total =			22156	35200	13044