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Determine the effect of the purchase of the additional units

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Reference no: EM132380329

Question

In Payment moncrief agreed to pay someone 20% of the gross profit recognized from the sale of a company. Using the LIFO assumption the following information is available

beginning inventory 1/1/2021 (10,000 units at $30) $300000

purchases (40;000 units @ $30) $1200000

sales (35,000 units @ $60). $2100000

Price has risen to $40 per unit. In 3 days before year end the company is in a position to purchase 20,000 additional units at $40 per unit. Due to the price increase the company increase the selling price to $80 per unit. Inventory on hand before the purchase 15000 units is sufficient to meet the next 6 months sales.

Determine the effect of the purchase of the additional 20,000 units on the 2012 gross profit from the sale of the company and the payment due to Jim.

Reference no: EM132380329

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