Exercise on inventories

Company A is a bags producer.

Some data about the operating activity are available over a time horizon of four periods.

• Period 1:
  The company purchases 2.000 € of raw material that enters in stock.
• Period 2:
  The company uses the raw material previously purchased, employs 1.000 € of direct labour and incurs in 500 € of other production costs, to produce semi-finished products, which are entered in stock.
• Period 3:
  The company uses the semi-finished products previously entered in stock, and employs an additional 500 € of direct labour, to produce finished products, which are entered in stock.
• Period 4:
  The company sells the finished products previously entered in stock, obtaining a total revenue of 5.000 €.

You are required to calculate Cost of Sales and Gross Profit at the end of each period.