Question

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $64; Second purchase $76; Third purchase $68. If the company sold two units for a total of $200 and used FIFO costing, the gross profit for the period would be ______.

Answer 1

$60

Step-by-step explanation:

As we know that

The gross profit is

Gross profit = Sales price - cost price

where,

Cost price is

= $64 + $76

= $140

We considered the first two purchases of the merchandise inventory

And, the sale price is $200

So, the gross profit is

= $200 - $140

= $60

We simply deduct the cost price from the sale price so that the gross profit could arrive