Final answer:
The inventory cost flow method that would result in a $22 gross profit in this situation is the First-In, First-Out (FIFO) method, as it accounts for the oldest inventory item first, which in this case is the fan purchased for $76.
Step-by-step explanation:
The question is which inventory cost flow method would result in a $22 gross profit when one of the two identical fans is sold for $100. Assume Fan 1 was purchased for $76 (in April) and Fan 2 for $80 (in May). Given these purchase prices, to achieve a $22 gross profit, the fan sold should be accounted for using the cost of the first fan purchased (i.e., the lower cost of $76), since the selling price is known to be $100. The $22 gross profit is calculated as $100 (selling price) - $76 (cost of fan purchased in April).
The inventory cost flow method that applies this principle is called the First-In, First-Out (FIFO) method. Under FIFO, the oldest inventory items are recorded as sold first, hence why the cost of Fan 1, the one bought for $76, would be used to compute the gross profit when the fan is sold for $100.