During 2017, Flint Furniture Company purchases a carload of wicker chairs. The manufacturer sells...
Question:
During 2017, Flint Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Flint for a lump sum of $54,900 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below:
| Type | No. of Chairs | Estimated Selling Price Each |
|---|---|---|
| Lounge chairs | 300 | $90 |
| Armchairs | 300 | 80 |
| Straight chairs | 800 | 50 |
During 2017, Flint sells 150 lounge chairs, 120 armchairs, and 110 straight chairs.
Required:
1. What is the amount of gross profit realized during 2017?
2. What is the amount of inventory of unsold straight chairs on December 31, 2017?
Gross Profit:
Gross profit, which is also referred to as gross margin, is the profit earned after the deduction of direct costs (or the cost of goods sold, COGS) from sales revenue. Direct costs include direct material, wage and factory expenses, or all variable costs associated with production, but exclude fixed costs.
Answer and Explanation: 1
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The amount of gross profit realized during 2017 is calculated as follows:
Total revenue = Revenue from lounge chairs + Revenue from armchairs +...
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