Question

				Units		Cost/unit
Feb. 1, 2017		Purchase		95		$40
Mar. 14, 2017		Purchase		164		$41
May 1, 2017		Purchase		116		$43

The company sold 269 units at $55 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO? (rounded to whole dollars)

Answer 1

Total Units Purchased = 95+164+116=375
Units sold = 269
Therefore Ending Inventory = 375-269 =106
Value of ending inventory =106 units *$43 =$4558
Cost of goods sold = total purchase - value of ending inventory
=(95*$40)+(164*$41)+(116*$43) -$4558
=$10954
=$15512-4558
=$10954
Gross profit = sale revenue - cost of goods sold
=(269 units*$55) -10954
=$3841