Nichols Company had 500 units of "Dink" in its inventory at a cost of $5 each.It purchased, for $2,400, 300 more units of "Dink".Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,700.The cost flow assumption used by Kingman

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The FIFO (First-In, First-Out) method assumes that the oldest inventory items are sold first. Nichols Company had 500 units at $5 each and purchased 300 more at $8 each ($2,400/300 units). Selling 600 units would mean selling the 500 units at $5 and 100 units at $8, resulting in a cost of goods sold of $3,300, which aligns with the given gross profit of $2,700 (sales of $6,000 - COGS of $3,300).

Nichols Company Had 500 Units of "Dink" in Its Inventory