Assume that three identical units of merchandise were purchased during October, as follows:
$$\begin{array} { | l | c | l | c | c | }
\hline & & & \text { Units } & \text { Cost } \
\hline \text { October } & 5 & \text { Purchase } & 1 & \$ 5 \
\hline & 12 & \text { Purchase } & 1 & 13 \
\hline & 28 & \text { Purchase } & \underline { 1 } & \underline { 15 } \
\hline \text { Total } & & & 3 & \$ 33 \
\hline
\end{array}$$
-One unit is sold on October 31 for $28. Using the table provided, determine gross profit under the FIFO method.
A) $28
B) $13
C) $15

Question

Assume that three identical units of merchandise were purchased during October, as follows:
 $$\begin{array} { | l | c | l | c | c | } 
\hline & & & \text { Units } & \text { Cost } \
\hline \text { October } & 5 & \text { Purchase } & 1 & \$ 5 \
\hline & 12 & \text { Purchase } & 1 & 13 \
\hline & 28 & \text { Purchase } & \underline { 1 } & \underline { 15 } \
\hline \text { Total } & & & 3 & \$ 33 \
\hline
\end{array}$$
-One unit is sold on October 31 for $28. Using the table provided, determine gross profit under the FIFO method.  
A) $28
B) $13
C) $15

Quizplus · Accepted Answer

Under the FIFO (First In, First Out) method, the first items purchased are the first ones sold. The cost of the first unit purchased is $5, so the cost of goods sold is $5. The selling price is $28, so the gross profit is $28 - $5 = $23.

Assume That Three Identical Units of Merchandise Were Purchased During