Table 6-2 $\begin{array} { | l | l | }
\hline \text { Manuary } 1 \text { inventory balance } & 100 \text { units at } \$ 10 \text { per unit } \
\hline \text { March } 2 \text { purchase } & 50 \text { units at } \$ 11 \text { per unit } \
\hline \text { July } 8 \text { purchase } & 80 \text { units at } \$ 10 \text { per unit } \
\hline \text { November } 15 \text { purchase } & 30 \text { units at } \$ 12 \text { per unit } \
\hline
\end{array}$ On December 31, a physical count reveals 80 units in ending inventory.
-Referring to Table 6-2, assuming all goods are sold throughout the year for $17 per unit, gross margin calculated under the periodic FIFO method would be:

Question

Table 6-2 $\begin{array} { | l | l | } 
\hline \text { Manuary } 1 \text { inventory balance } & 100 \text { units at } \$ 10 \text { per unit } \
\hline \text { March } 2 \text { purchase } & 50 \text { units at } \$ 11 \text { per unit } \
\hline \text { July } 8 \text { purchase } & 80 \text { units at } \$ 10 \text { per unit } \
\hline \text { November } 15 \text { purchase } & 30 \text { units at } \$ 12 \text { per unit } \
\hline
\end{array}$ On December 31, a physical count reveals 80 units in ending inventory.
-Referring to Table 6-2, assuming all goods are sold throughout the year for $17 per unit, gross margin calculated under the periodic FIFO method would be:

Quizplus · Accepted Answer

The correct answer is A because under the periodic FIFO method, the cost of goods sold is calculated by multiplying the number of units sold by the cost of the oldest units in inventory. In this case, the oldest units in inventory are the 100 units purchased on January 1 at $10 per unit. The remaining 80 units in ending inventory are the 50 units purchased on March 2 at $11 per unit and the 30 units purchased on November 15 at $12 per unit. Therefore, the cost of goods sold is 100 units x $10 per unit + 80 units x $11 per unit = $1,210. The gross margin is then calculated by subtracting the cost of goods sold from the sales revenue, which is 170 units x $17 per unit = $2,890. Therefore, the gross margin is $2,890 - $1,210 = $1,210.

Table 6-2 On December 31, a Physical Count Reveals 80 Units in \hline

Table 6-2 On December 31, a Physical Count Reveals 80 Units in
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