13BP_b At the end of January, Mineral L... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 13BP_b (page 115)

At the end of January, Mineral Labs had an inventory of 775 units, which cost $12 per unit to produce. During February, the company produced 900 units at a cost of $16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.

Short Answer

Expert verified

Cost of goods sold of the company is $20,900.

Step by step solution

FIFO inventory accounting method

FIFO accounting method is defined as the valuation method in which the products produced or acquired first are sold or used first. It is method of managing the inventory.

Cost of goods sold

$\begin{array}{rcl} Cost of goods sold & = & Units 脳 Cost per unit \\ = & (775 脳 $ 12) + ((1, 500 - 775) 脳 $ 16) \\ = & $ 20, 900 \end{array}$

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Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

	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

Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

Selling and administrative expenses	$328,000
Depreciation expenses	195,000
Sales	1,660,000
Interest expenses	129,000
Cost of goods sold	560,000
Taxes	171,000

91影视

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.

Short Answer

Step by step solution

FIFO inventory accounting method

Cost of goods sold

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Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Financial Performance

Sales in Business

Business Case Studies

Project Planning & Management

Managerial Economics

Actuarial Science in Business

Study anywhere. Anytime. Across all devices.

91影视

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?b. Assume FIFO inventory accounting.

Short Answer

Step by step solution

FIFO inventory accounting method

Cost of goods sold

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Financial Performance

Sales in Business

Business Case Studies

Project Planning & Management

Managerial Economics

Actuarial Science in Business

Study anywhere. Anytime. Across all devices.

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.