Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
$\begin{array}{|l|l|l|l|}
\hline \text { Date } & \text { Product Z } & \text { Units } & \text { Cost } \
\hline \text { May 3 } & \text { Purchase } & 5 & \$ 20 \
\hline \text { May 10 } & \text { Sale } & 3 & \
\hline \text { May 17 } & \text { Purchase } & 10 & \$ 24 \
\hline \text { May 20 } & \text { Sale } & 6 & \
\hline \text { May 23 } & \text { Sale } & 3 & \
\hline \text { May 30 } & \text { Purchase } & 10 & \$ 30 \
\hline
\end{array}$ Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.
A) $108
B) $120
C) $72
D) $180

Question

Quizplus · Accepted Answer

Under FIFO, the cost of goods sold for the May 23 sale of 3 units is based on the oldest inventory. The first 2 units are from the May 17 purchase at $24 each, and the last unit is from the May 3 purchase at $20. The total cost is (2 x $24) + (1 x $20) = $68. The sales revenue is 3 x $60 = $180. Therefore, the gross profit is $180 - $68 = $112.

Use the Following Information to Answer the Following Questions Assuming That the Company Uses the Perpetual Inventory System, Determine