Nicholas Industries had the following inventory transactions occur during 2022: $\begin{array}{llll}&&\text {Units}&\text { Cost/unit}\\hline
2 / 1 / 22 & \text { Purchase } & 54 & \$ 45 \
3 / 14 / 22 & \text { Purchase } & 93 & \$ 47 \
5 / 1 / 22 & \text { Purchase } & 66 & \$ 49
\end{array}$ The company sold 140 units at $65 each. Assume that a periodic inventory system is used, what is the company's gross profit using FIFO?

Question

Quizplus · Accepted Answer

To calculate gross profit using FIFO method, we need to assume that the first products purchased are the first ones sold.

First, we need to calculate the cost of goods sold:

- 80 units at $40 = $3,200
- 60 units at $42 = $2,520

Total cost of goods sold = $5,720

Then, we need to calculate the revenue from the sales:

- 140 units at $65 = $9,100

Finally, we subtract the cost of goods sold from the revenue to get the gross profit:

- Gross profit = revenue - cost of goods sold
- Gross profit = $9,100 - $5,720
- Gross profit = $3,380

Therefore, the correct answer is B) $2,628.

Nicholas Industries Had the Following Inventory Transactions Occur During 2022