Question

During 2016, Handy Appliances made and sold coffee makers. At the beginning of the year the company had 37 units, 14,382 units were sold during the year, and 14,385 units were made during the year. Each coffee maker costs $8.42 to produce and each coffee maker is sold for $15.50. At the end of the year, what amount will Handy report on its balance sheet for finished goods inventory?
A : $527.00
B : $286.28
C : $25.26
D : $336.80

Answer 1

Answer:

option D

Explanation:

given,

unit at beginning = 37 unit

unit sold in year = 14,382 units

unit made this year = 14,385 units

coffee maker costs =  $8.42

coffee maker is sold = $15.50

finished good inventory = ?

now,

inventory = unit at beginning - unit sold in year +  unit made this year

inventory = 14,385 + 37 - 14,382

                = 40 units

amount balanced = 40 × $8.42

                             = $ 336. 80

hence, the correct answer is option D

Answer 2

Answer:

$336.80

Explanation:

The number of units in finished goods inventory can be calculated as beginning inventory + units made – units sold. This value is then multiplied by the unit cost (not the unit sale price) to determine the value of the ending finished goods inventory or

(37 + 14,385 – 14,382) x $8.42 = $336.80.