During 2017, Swifty Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Swifty for a lump sum of $61,600 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|
During 2017, Swifty sells 200 lounge chairs, 120 armchairs, and 110 straight chairs.
What is the amount of gross profit realized during 2017? What is the amount of inventory of unsold straight chairs on December 31, 2017?
Determining the Gross Profit:
The gross profit earned during a given period is ascertained by deducting the total cost of goods sold from the sales revenue where the total cost of goods sold is determined by taking a sum of the cost of goods sold for all the products. The cost of goods sold is inversely related to the ending inventory value.
Answer and Explanation: 1
The total amount of sales revenue is given by:
- = (Number of lounge chairs * selling price per chair) + (number of armchairs * selling price per...
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fromChapter 9 / Lesson 7
Understand the meaning of gross profit in accounting. Discover the formula for calculating gross profit and explore some examples of gross profit calculation.