Question

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $62; Second purchase $69; Third purchase $60. If the company sold two units for a total of $212 and used FIFO costing, the gross profit for the period would be

Answer 1

The gross profit for the period would be $81.

What is FIFO?

According to the accounting principle known as first in, first out (FIFO), assets that are bought or acquired first are also the first to be sold. According to FIFO, the inventory still on hand is made up of products that were bought last.

Given that, the company made the first purchase at $62; second purchase at $69, and third purchase at $60.The company sold two units for a total of $212 and used FIFO costing.

Cost price of first two items = $62 + $69

                                           = $131

The company sold two units at $212

Gross profit = $212 - $131

                   = $81

To understand more about FIFO costing refer to: https://brainly.com/question/11493725

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