What caused the FIFO and LIFO gross profit figures to differ?

Suppose a Best Buy store in Orlando, Florida, ended May 20X6 with 800,000 units of merchandise that cost an average of $7 each. Suppose the store then sold 600,000 units for $5.0 million during June. Further, assume the store made 2 large purchases during June as follows:

June 6

100,000 units @ $6

=

$ 600,000

21

400,000 units @ $5

=

2,000,000

1. At June 30, the store manager needs to know the store’s gross profit under both FIFO and LIFO. Supply this information.

2. What caused the FIFO and LIFO gross profit figures to differ? (Challenge).

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