The Gross Profit Method The gross profit method is used to estimate the amount of ending inventory. Its use is not appropriate for financial reporting purposes; however, it can serve a useful purpose when an approximation of ending inventory is needed. Example: E8-12 Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Compute the estimated inventory at May 31, assuming that the gross profit is 30% of sales. Compute the estimated inventory at May 31, assuming that the gross profit is 30% of cost