A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $290 and used FIFO costing, the gross profit for the period would be
A) $115.
B) $125.
C) $110.
D) $100.

Question

Quizplus · Accepted Answer

The first two units sold were from the first two purchases, which cost $80 and $95, respectively. The gross profit is the difference between the selling price and the cost of goods sold, which is $290 - ($80 + $95) = $115.

A Company Just Starting in Business Purchased Three Merchandise Inventory