Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: $\begin{array}{llrr}&\text { Units } &\text { Per unit price }&\text { Total }\
\text { Balance, } 1 / 1 / 2017 & 300 & \$ 5.00 & \$ 1.500 \
\text { Purchase, } 1 / 15 / 2017 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2017 & 150 & 5.50 & 825
\end{array}$ An end of the month (1/31/2017) inventory showed that 240 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?
A)$1,782
B)$1,818
C)$3,600
D)$2,400

Question

Quizplus · Accepted Answer

Under FIFO, the oldest costs are assigned to the cost of goods sold. The cost of goods sold is calculated as follows: 300 units at $5.00 + 60 units at $5.30 = $1,038. Sales revenue is 360 units at $10 = $3,600. Gross profit is $3,600 - $1,038 = $2,562. However, the correct gross profit calculation should be $3,600 - $1,818 = $1,782.

Dobler Company Uses a Periodic Inventory System An End of the Month (1/31/2017) Inventory Showed That 240