COGS – FIFO & Gross Profit (Miller Corp)

Practice Question

Intro to Financial Accounting
Cost of Sales and Inventory Management
COGS
Short Answer

Miller Corp. has the following data for the quarter: Beginning Inventory: 112 units @ $72, Purchases: 76 units @ $71, Sales: 121 units. Calculate the cost of goods sold (COGS) using FIFO. What is the gross profit if the selling price per unit is $99?

Answer +
Final Answer: COGS = $8,703; Gross Profit = $3,276
Explanation +

Step 1: Identify units sold and apply FIFO.

121 units sold:

  • 112 units @ $72 = $8,064
  • 9 units @ $71 = $639

Total COGS = $8,064 + $639 = $8,703

Step 2: Calculate revenue.
Revenue = 121 units × $99 = $11,979

Step 3: Calculate gross profit.
Gross Profit = $11,979 – $8,703 = $3,276