RF Company had January 1 inventory of $150,000 when it adopted dollar-value LIFO. During the year, purchases were $900,000 and s
1 answer:
Answer:
Gross profit = $647,040
so correct option is B. $647,040
Explanation:
given data
inventory = $150,000
purchases = $900,000
sales = $1,500,000
inventory end prices = $215,040
price index = 112
to find out
RF Company's gross profit
solution
at 31st December base year inventory prices will be
base year inventory prices =
base year inventory prices = $192,000
and
now Changes in inventory from beginning will be here as
Changes in inventory from beginning = $192000- $150000
Changes in inventory from beginning = $42,000
so as that 31st December as LIFO
inventory at dollar value is = $150000 × 100% + $42000 × 112%
inventory at dollar value = $150000 + 47040
inventory at dollar value = $197,040
so
Cost of goods sold will be here as
Cost of goods sold = beginning inventory + purchases - ending inventory .........................1
put here value
Cost of goods sold = $150,000 + $900,000 - $197,040
Cost of goods sold = $852,960
so Gross profit will be here
Gross profit = sales - cost of goods sold .........................2
put here value
Gross profit = $1500000 - $852960
Gross profit = $647,040
so correct option is B. $647,040
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Answer:
(A) Mexican supplier cost = $445,800 or $89.16 average cost.
In-house cost = $714,000 or $142.8
(B) Mexican supplier total weighted score = 0.265 or 22.43%
In-house supplier weighted score= 0.238 or 23.8%
(C) Yes, explaination below
Explanation:
Mexican Supplier cost breakdown:
Quota price $83 X 5000 = $415, 000
Transport cost
1. to transport 5000 doors would require making a total of 20 trips from Mexico to USA (5000/250 doors)
2. at a cost of $825 per trip, total cost to transport doors is = $16,500.
Sending Engineers costs and Negotiation cost =
$5000 + $1000
(Transport+Sending Engineers cost) =
$22,500
Inventory carrying cost= 20% of cost of storing the goods. (total of all other cost) 20% x 22500 = $8300
Total cost = $445,800 or $89.16 average cost.
Total weighted score average:
Using the formula;
Weight= score x rating
Score = Weight/rating (making score subject of the formula)
Mexican Weighted
score1= 16%/3 = 0.0533, + 0.12 score2, + 0.035 + score3, + 0.056 + score4. = 0.265.
American weighted score
Using same formula;
0.04 score1, + 0.15 score2, + 0.014 score3, + 0.034 score 4 = 0.238.
The company should outsource the product. Why? because it will reduce total cost of doors, making them cheaper for if they do so, resulting in higher profit.
