Chapter 2: 11BP (page 115)

On December 31 of last year, Wolfson Corporation had in inventory 450 units of its product, which cost $22 per unit to produce. During January, the company produced 850 units at a cost of $25 per unit. Assuming that Wolfson Corporation sold 800 units in January, what was the cost of goods sold (assume FIFO inventory accounting)?

Short Answer

Expert verified

The cost of goods sold of the company is $18,650.

Step by step solution

Ending inventory in units

$\begin{array}{rcl} Ending inventory & = & Beginning inventory + Units produced - Sales units \\ = & 450 + 850 - 800 \\ = & 500 \end{array}$

Cost of goods sold

$\begin{array}{rcl} Cost of goods sold & = & (Beginning units \times Unit price) + (Units produced \times Unit price) - (Ending units \times Unit price) \\ = & (450 \times $ 22) + (850 \times $ 25) - (500 \times $ 25) \\ = & $ 18, 650 \end{array}$

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Times mirror and glass company
Sales	\(126,000
Less: Cost of goods sold	93,000
Gross profit	\)33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\(18,000
Less: Interest expenses	3,000
Earning before taxes	\)15,000
Less: Taxes (30%)	4,500
Earning after taxes	$10,500

	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910

	Capable corporation	Muli-media inc
Net income	\(31,200	\)140,000
Sales	317,000	2,700,000
Total assets	402,000	965,000
Total debts	163,000	542,000
Stockholder’s equity	239,000	423,000

Short Answer

Step by step solution

Ending inventory in units

Cost of goods sold

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