A company just starting business made the following four inventory purchases in June: $\begin{array}{lrlr}
\text { June } 1 & 150 \text { units } & \$ 390 \
\text { June } 10 & 200 \text { units } & 585 \
\text { June } 15 & 200 \text { units } & 630 \
\text { June } 28 & 150 \text { units } & 510\&&\$2,115
\end{array}$ A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

Question

A company just starting business made the following four inventory purchases in June: $\begin{array}{lrlr}
\text { June }  1 & 150 \text { units } & \$ 390 \
\text { June }  10 & 200 \text { units } & 585 \
\text { June }  15 & 200 \text { units } & 630 \
\text { June }  28 & 150 \text { units } & 510\&&\$2,115
\end{array}$ A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

Quizplus · Accepted Answer

Under the FIFO method, the oldest costs are assigned to the cost of goods sold, leaving the most recent costs in ending inventory. Since prices are rising, FIFO results in lower cost of goods sold and higher gross profit.

A Company Just Starting Business Made the Following Four Inventory