A Company Just Starting in Business Purchased Three Merchandise Inventory

question 166

Multiple Choice

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be

• A) $65.
• B) $75.
• C) $60.
• D) $50.

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Definitions:

Suggested Retail Price

The price a manufacturer recommends retailers to sell their product for to consumers.

Discount

A reduction in the price of a product or service, often to attract customers or to sell off excess stock.

Liter

A metric unit of volume equal to one cubic decimeter, used to measure the capacity of liquids and gases.

Average Selling Price

The mean amount of money for which a product is sold in a specific period or marketplace.