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1. The Bradley Corporation produces a product with the following costs as of July 1, 20X1: Material $5 per unit Labor 3 per unit Overhead

1. The Bradley Corporation produces a product with the following costs as of July 1, 20X1:

Material $5 per unit
Labor 3 per unit
Overhead 1 per unit

Beginning inventory at these costs on July 1 was 3,950 units. From July 1 to December 1, 20X1, Bradley produced 13,900 units. These units had a material cost of $2, labor of $4, and overhead of $2 per unit. Bradley uses LIFO inventory accounting.

a.Assuming that Bradley sold 16,800 units during the last six months of the year at $13 each, what is its gross profit?

b.What is the value of ending inventory?

2. Galehouse Gas Stations Inc. expects sales to increase from $1,690,000 to $1,890,000 next year. Galehouse believes that net assets (Assets Liabilities) will represent 65 percent of sales. His firm has an 11 percent return on sales and pays 35 percent of profits out as dividends. a.What effect will this growth have on funds?

b.If the dividend payout is only 15 percent, what effect will this growth have on funds?

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