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Convex Mechanical Supplies produces a product with the following costs as of July 1, 20X1: Material...

Convex Mechanical Supplies produces a product with the following costs as of July 1, 20X1:

Material $5
Labor 4
Overhead 3
$12

  

Beginning inventory at these costs on July 1 was 5,500 units. From July 1 to December 1, Convex produced 16,000 units. These units had a material cost of $7 per unit. The costs for labor and overhead were the same. Convex uses FIFO inventory accounting.

a. Assuming that Convex sold 18,000 units during the last six months of the year at $14 each, what would gross profit be?
  


b. What is the value of ending inventory?
  

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Answer #1
a] Sales [18000*14] $       252,000
COGS:
5500*12 = $           66,000
12500*14 = $         175,000 $       241,000
Gross profit $         11,000
b] Value ending inventory = 3500*14 = $         49,000
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