During the year ended 28 February 20X4, Biddy sells 14 072 units of inventory at £31.25 each.Her gross profit on each unit of inventory is £9.25.She purchased inventory to the value of £335 940 between 1 March 20X3 and 28 February 20X4.At 28 February 20X4 she has 2040 units in inventory.There have been no changes to cost or selling prices during the two-year period to 28 February 20X4. What was the value of Biddy's opening inventory at 1 March 20X3?

Question

Quizplus · Accepted Answer

To find the value of the opening inventory at 1 March 20X3, we first calculate the cost of goods sold (COGS) and then use the inventory formula: Opening Inventory + Purchases - COGS = Closing Inventory.1. Calculate sales revenue: 14,072 units * £31.25 = £439,7502. Calculate gross profit: 14,072 units * £9.25 = £130,1663. Calculate COGS: Sales revenue - Gross profit = £439,750 - £130,166 = £309,5844. Use the inventory formula to find the opening inventory:   Opening Inventory = COGS + Closing Inventory - Purchases   Closing Inventory = 2,040 units * (Sales price - Gross profit per unit) = 2,040 * (£31.25 - £9.25) = 2,040 * £22 = £44,880   Opening Inventory = £309,584 + £44,880 - £335,940 = £18,524Therefore, the value of Biddy's opening inventory at 1 March 20X3 was £18,524.

During the Year Ended 28 February 20X4, Biddy Sells 14