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Calculating ending inventory and gross profit in LIFO

Jerrico Wallboard Co. had a beginning inventory of 7,000 units on January 1, 2004.

The costs associated with the inventory were:

Material $9.00 unit
Labor 5.00 unit
Overhead 4.10 unit

During 2004, Jerrico produced 28,500 units with the following costs:

Material $11.50 unit
Labor 4.80 unit
Overhead 6.20 unit

Sales for the year were 31,500 units at $29.60 each. Jerrico uses LIFO
accounting. What was the gross profit? What was the value of ending inventory?


Solution Summary

The solution explains calculation of ending inventory and gross profit in LIFO inventory system