Answer:
What is the amount of gross profit realized during 2020?
(460 x $33.30) + (230 x $29.60) + (276 x $18.50) = $27,232
What is the amount of inventory of unsold straight chairs on December 31, 2020?
[(920 - 460) x $56.70] + [(690 - 230) x $50.40] + [(1,610 - 276) x $31.50] = $26,082 + $23,184 + $42,021 = $91,287
Explanation:
lump sum cost of chairs = $137,655
Type Chairs Selling Price Each Total
Lounge chairs 920 $90 $82,800
Armchairs 690 $80 $55,20
<u>Straight chairs 1,610 $50 $80,500</u>
total 3,220 $218,500
if we allocate costs based on resale, then each chair should cost:
Lounge chairs $90 x ($137,655 / $218,500) = $56.70
Armchairs $80 x ($137,655 / $218,500) = $50.40
Straight chairs $50 x ($137,655 / $218,500) = $31.50
contribution margin per chair:
Lounge chairs $90 - $56.70 = $33.30
Armchairs $80 - $50.40 = $29.60
Straight chairs $50 - $31.50 = $18.50
