Purchase Solution

Gross Profit and Ending Inventory FIFO and LIFO

Not what you're looking for?

Ask Custom Question

Converse Supplies produces a product with the following costs as of July 1, 2009.

Material $6
Labor $4
Overhead $2

Beginning inventory at these costs on 1 July was 5,000 units. From 1 July to 1 December, Converse produced 15,000 units. These units had a material cost of $10 per unit. The costs for labor and overhead were the same. Converse uses FIFO inventory accounting. Assuming that converse sold 17,000 units during the last 6 months of the year at $20, what would gross profit be? What is the value of ending inventory?

How about if Converse used LIFO accounting instead? What would its gross profit be? What is the value of its ending inventory?

Show all work and explain.

Purchase this Solution
Solution Summary

This solution provides a detailed a computation of the given accounting problem.

Solution Preview

** Please see the attached file for the complete solution response **

Units Cost Per unit
Beginning inventory 5,000 $60,000 $12
Production during the period 15,000 $240,000 $16
20,000 300,000

FIFO Inventory valuation

Gross profit
Sales 17,000 $340,000
Less: Cost ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

View More Free Quizzes
Related BrainMass Solutions

  • Inventory calculations

    LIFO has the lowest gross profit as it matches the current costs which are higher. Average cost is in between FIFO and LIFO The solution explains how to calculate ending inventory, CGS, gross profit using LIFO, FIFO, Average cost methods

  • LIFO, FIFO, Average cost; Perioidic and Perpetual Methods

    using the periodic LIFO cost flow assumption is $2180 and using weighted average price is $2200 The gross profit for the year using periodic FIFO is $660 The gross profit for the year using periodic LIFO is $500 The gross profit for the year

  • FIFO and LIFO Periodic and Perpetual

    Ending Inventory (LIFO) $______________ C) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO Gross Profit (FIFO) $____________

  • Inventory calculations

    inventory calculations under LIFO, FIFO and average cost

  • LIFO & FIFO problems

    880 Operating Income 560 Tax(40%)224 Net Income336 If LIFO Sales 2800 Gross profit1120 Operating Expenses 880 Operating Income240 Tax (40%)96 Net Income 144 The solution explains the calculation of gross profit under LIFO and FIFO inventory

  • IFRS & GAAP - Inventory Costing and Valuation

    Therefore: LIFO: When prices are rising the LIFO method has the highest cost of goods sold, the lowest Gross Profit and the Lowest ending Inventory figures.

  • Comparative effects of the FIFO and LIFO

    (4) How much more cash will be available for management under LIFO than under FIFO? Why? (5) How much of the gross profit under FIFO is illusionary in comparison with the gross profit under LIFO? Please see the attachment.

  • Inventory Valuation- LIFO, FIFO, average cost

    The inventory method which results in the highest gross profit for June is a. the FIFO method. b. the LIFO method. c. the weighted average unit cost method. d. not determinable.

  • Costing Methods for Highest Profit

    LIFO method. 3 Statement showing COGS and cost of ending inventory under FIFO method 4 Statement showing COGS and cost of ending inventory under Average cost method 5 Consolidated statement showing comparative COGS and cost of inventory under

View More Related Solutions