Question - Relative Sales Value Method
During 2011, Crawford Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Crawford for a lump sum of $61,000, 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
Lounge chairs 400 $112.50
Armchairs 300 100.00
Straight chairs 800 62.50
During 2011, Crawford sells 200 lounge chairs, 100 armchairs, and 120 straight chairs.
What is the amount of gross profit realized during 2011? What is the amount of inventory of unsold straight chairs on December 31, 2011? (When computing costs to determine net income, do not round the percentages for relative sales price. Round calculations for cost per chair to 2 decimal places, e.g. 2.25 and use this rounded amount for future calculations. Round final answers to 0 decimal places, e.g. 12,510.)
Gross profit realized in 2011 $ __________
Amount of inventory of unsold straight chairs $ _______