Dobler Company uses a periodic inventory system.Details for the inventory account for the month of January 2022 are as follows: $$\begin{array} { l l r r }
& \underline { \text { Units } } & \underline{\text { Per unit price }} & \underline { \text { Total } } \
\text { Balance, } 1 / 1 / 2022 & 300 & \$ 5.00 & \$ 1,500 \
\text { Purchase, } 1 / 15 / 2022 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2022 & 150 & 5.50 & 825
\end{array}$$ 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?
A)$1782
B)$1818
C)$3600
D)$2400

Question

Dobler Company uses a periodic inventory system.Details for the inventory account for the month of January 2022 are as follows: $$\begin{array} { l l r r } 
& \underline { \text { Units } } & \underline{\text { Per unit price }} & \underline { \text { Total } } \
\text { Balance, } 1 / 1 / 2022 & 300 & \$ 5.00 & \$ 1,500 \
\text { Purchase, } 1 / 15 / 2022 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2022 & 150 & 5.50 & 825
\end{array}$$ 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?
A)$1782
B)$1818
C)$3600
D)$2400

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased are the first units sold. Therefore, the cost of goods sold for January is:300 units @ $5.00 = $1,500150 units @ $5.30 = $795Total cost of goods sold = $2,295Gross profit is calculated as:Sales revenue - Cost of goods soldSales revenue = 240 units @ $10 = $2,400Gross profit = $2,400 - $2,295 = $1782

Dobler Company Uses a Periodic Inventory System An End of the Month (1/31/2022) Inventory Showed That 240