Question

Concord Corporation uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows:

Units Per unit price Total
Balance, 1/1/2017 240 $4.00 $960
Purchase, 1/15/2017 120 ..4.20 504
Purchase, 1/28/2017 120 ..4.40 528

An end of the month (1/31/2017) inventory showed that 190 units were on hand. If the company uses FIFO and sells the units for $8.00 each, what is the gross profit for the month?

Answer 1

Gross profit= $1150

Step-by-step explanation:

Giving the following information:

Beginning inventory: 240u*$4.00= $960

Purchase, (1/15/2017)= 120u*4.20= $504

Purchase, (1/28/2017)= 120u*4.40= $528

Ending inventory= 190u

The company uses FIFO (first in, first out).

Sale price= $8.00 each.

What is the gross profit for the month?

First, we need to calculate the number of units sold:

Sold units= Beginning inventory + purchase - ending inventory= 240 + 240 - 190= 290 units

Revenue= 290*8= $2320

Cost of goods sold= 240*$4 + 50*4.20= $1170

Gross profit= $1150