146k views
4 votes
Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows: Units Per unit price Total Balance, 1/1/2022 300 $5.00 $1,500 Purchase, 1/15/2022 150 5.30 795 Purchase, 1/28/2022 150 5.50 825 An end of the month (1/31/2022) inventory showed that 240 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

2 Answers

4 votes

Answer:

$1,728 is our gross profit.

Step-by-step explanation:

When calculating for gross profits, we should find the cost of goods available for sale. The cost of goods available for sale can mathematically be denoted as the sum of the beginning inventory and net purchases. To calculate the cost of goods available for sale in the question, we add the beginning inventory and net purchases. Beginning inventory is $1,500 and all purchases totalled $1,620. The sum is now $3,120. $3,120 is our cost of goods available for sale. Our sales are 360 units. This was gotten from the sum total of all units from the beginning inventory to the purchases less goods at hand. That is, 300 + 150 + 150 = 600 - 240 = 360 units. Remember, all sales were at $10. So, 360 × $10 = $3,600. Our sales is $3,600.

To determine our closing inventory, cost of goods available for sale is divided by the sum of beginning inventory and net purchases( in units). That is, $3,120 ÷ 600 units = $5.20. 240 units were at hand. So therefore, 240 units × $5.20 being its value = $1,248.

This amount is subtracted from the sum total of beginning inventory and net purchases. Which is, $3,120 - $1,248 = $1,872. This amount is then subtracted from the sales which is $3,600. The result is $1,728. $1,728 is therefore, our gross profit.

User Lightbreeze
by
4.1k points
3 votes

Answer:

Option D $1,190 is correct

Step-by-step explanation:

Total units available 400 =200+100+100

Less: Ending inventory 160

Units sold 240

Sales revenue 2400 =240*10

Less: Cost of goods sold 1210 =(200*5)+(240-200)*5.25

Gross profit for the month 1190

Option D $1,190 is correct

User Cbare
by
4.3k points