Calculate Estimated Cost of Ending Inventory Using the Gross Profit

question 104

Short Answer

Calculate estimated cost of ending inventory using the gross profit method:
$$\begin{array} { | l | l | } \hline \text { Gross profit on sales } & 35 \% \\\hline \text { Beg inventory June 1, 2017 } & \$ 22,000 \\\hline \text { Net purchases } & \$ 6,600 \\\hline \text { Net sales at retail for June } & \$ 12,000 \\\hline\end{array}$$

---

Definitions:

Safety Stock Computation

The calculation of a buffer quantity of inventory kept on hand to prevent stockouts, based on variability in demand and supply.

Standard Deviation

A statistical measure of the dispersion or variability within a data set, indicating how much individual values differ from the average.

Inventory Management

The practice of overseeing and controlling the ordering, storage, and use of components and finished products.

Inventory Classification

The process of categorizing inventory items based on their importance, such as ABC analysis which ranks items by their impact on total inventory cost.