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# Gross profit/ending inventory and Schedule of Cash Receipts

Gross profit and ending inventory

A corporation produces a product with following costs as of July 1, 2011.
Material \$2 per unit Labor \$4 per unit Overhead \$2 per unit
Beginning inventory at these costs on July 1st was 3,000 units. From July 1 to December 1, 2011 the corporation produced 12,000 units. These units had a materials cost of \$3, labor of \$5, and overhead of \$3 per unit. This corporation uses FIFO inventory accounting.
Assuming that this corporation sold 13,000 units during the last six months of the year at \$16 each, what is the gross profit? What is the value of ending inventory?

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Schedule of Cash Receipts
Problem 2
Victoria's Apparel has forecast credit sales for the fourth quarter of the year as:
September (actual) \$50,000
Fourth Quarter
October \$40,000
November \$35,000
December \$60,000
Experience has shown that 20 percent of sales receipts are collected in the month of sale, 70 percent in the following month, and 10 percent are never collected.
Prepare a schedule of cash receipts for Victoria's apparel covering the fourth quarter (October through December).

#### Solution Preview

Gross profit and ending inventory
Problem 1
A corporation produces a product with following costs as of July 1, 2011.
Material \$2 per unit Labor \$4 per unit Overhead \$2 per unit
Beginning inventory at these costs on July 1st was 3,000 units. From July 1 to December 1, 2011 the corporation produced 12,000 units. These units had a materials cost of \$3, labor of \$5, and overhead of \$3 per unit. This corporation uses FIFO inventory accounting.
Assuming that this corporation sold ...

#### Solution Summary

Solution helps in estimating Gross profit/ending inventory and Schedule of Cash Receipts

\$2.19