The following information was extracted from the accounting records of pickin’ and grinnin’, llc, a manufacturer of guitars: beginning raw materials inventory $375,000 ending raw materials inventory $435,000 direct factory labor $185,000 indirect factory labor $ 35,000 factory utilities $ 44,000 selling, general, and administrative expenses $125,000 building depreciation* $300,000 *70% of the building is devoted to production, 30% of the building is devoted to selling and administrative functions. $440 comma 546 in direct materials were purchased during the period. raw materials inventory consists solely of direct material. there was a $47 comma 476 net increase in the company’s work in process inventories during the year. the company's beginning and ending finished goods inventories were $475,000 and $450,000, respectively. based solely on the above information, what is the company's gross profit for the period assuming sales revenue totaled $1 comma 449 comma 436?

Gross profit= $783866

Explanation:

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Gross profit=Revenue−Cost of goods sold (COGS)

COGS=Beginning Inventory (finished products)+Production during period−Ending Inventory (finished products)

Gross profit assesses a company's efficiency at using its labor and supplies in producing goods or services. Consider variable costs – that is, costs that fluctuate with the level of output, such as:

materials, direct labor, commissions for sales staff, credit card fees on customer purchases, equipment, utilities for the production site, shipping,  etc

First, we need to calculate the production during the period:

Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress

Net workin progress= $47476

Direct materials = beginning inventory + purchase - ending inventory= 375000+ 440546 - 435000= 380546

Direct labor=  $18500

Manufactured overhead=indirect labor+building depretiation (70%)+ factory utilities= 35000+ 30000*0,70+44000=289000

Cost of good manufactured=-47476+380546+18500+289000=$640570

Now we can calculate the cost of sold goods

COSG=Beginning Inventory (finished products)+Production during period−Ending Inventory (finished products)

COSG= 475000+640570-450000=$665570

Finally, we calculate the gross profit

Gross profit= revenue - COSG= 1449436 - 665570= $783866