Question

Cox Corporation produces a product with the following costs as of July 1, 20XX: Material $...

Cox Corporation produces a product with the following costs as of July 1, 20XX:

Material $ 5 per unit
Labour 3 per unit
Overhead 1 per unit

Assuming Cox sold 15,800 units during the last six months of the year at $14 each, beginning inventory at these costs on July 1 was 3,700 units. From July 1 to December 31, 20XY, Cox produced 13,400 units. These units had a material cost of $2 per unit. The costs for labour and overhead were the same. (Round your intermediate values to 2 decimal places and final answer to the nearest whole dollars.)

a. Assumed Cox Corportation used average cost inventory accounting, what would gross profit be?

Gross profit           $

b. Assumed Cox Corporation used average cost inventory accounting, what is the value of ending inventory?

Ending inventory           $
please explain for me cause I don't understand.

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Homework Answers

Answer #1

Particulars

 Units Cost/unit Total Amount
1.Opening Inventory 3700 $9(5+3+1) $33300

2.Production

(Jul-Dec)

 13400

$6(2+3+1)

 $80400
3.Sales 15800 $14 $221200

4.Closing Inventory

(1+2-3)

 1300 $6.65* $8645

5.COGS

(1+2-4) Units * Avg Cost

 15800 $6.65* $105070

6.Gross Profit

(3-5)

 $116130

*Average cost of inventory per unit

Wt. Avg cost = Total cost of available units for sale/Total no. of. Available units

=(33300+80400) /(3700+13400)

=$6.65

Final Answer

a. Gross Profit= $116130

b. Value of ending Inventory=$8645

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