Solution-Estimate the inventory loss

Estimate the inventory loss

Assignment Help Business Management

Reference no: EM131105003

The Dexall Company recently had a fire in its store. Management must determine the inventory loss for the insurance company. Since the firm did not have perpetual inventory records, the insurance company has suggested that it might accept an estimate using the gross profit test. The beginning inventory, as determined from the last financial statements, was $10,000. Purchase invoices indicate purchase of $100,000. Credit and cash sales during the period were $120,000. Last year, the gross profit for the firm was 40%, which was also the industry average.

Required

a. Based on these data, estimate the inventory loss.

b. If the industry average gross profit was 50%, why might the insurance company be leery of the estimated loss?

Reference no: EM131105003

Questions Cloud

Prove that f is continuous if and only if graph is compact : Let f: [0, 1] → R be a function. The "graph" of f is the following subset of R2: G = {(x, f(x)) | x ∈ [0, 1]}. Prove that f is continuous if and only if its graph is compact

Select any three countries of your choice : Select any three countries of your choice (one from a developed nation, a ‘second world' country, and an underdeveloped third world country) and find epidemiological data such as fertility indicators (crude birth and death rates) and other health ..

Equity stake the venture capitalist : ACW should plan to execute an IPO in three years at which time the firm is expected to have net profits of $7 million and to sell at a price / earnings ratio of 10. What would be the percent equity stake the venture capitalist will receive in exch..

To use causal forecasting to forecast sales : Luxury Cruise Lines has a fleet of ships that travel to Alaska repeatedly every summer (and elsewhere during other times of the year). A considerable amount of advertising is done each winter to help generate enough passenger business for that sum..

Estimate the inventory loss : a. Based on these data, estimate the inventory loss. b. If the industry average gross profit was 50%, why might the insurance company be leery of the estimated loss?

Determine which of the following devices are unconditionally : Use the µ-parameter test to determine which of the following devices are unconditionally stable and, of those, which has the greatest stability:

Two-dimensional graph with the year on the horizontal axis : Reconsider Prob. 20.7-9. Despite some fluctuations from year to year, note that there has been a basic trend upward in the annual demand for copper ore over the past 10 years.

Consider the definition and the trivaial equality : The exercises in this section prepare the reader for the next three chapters instead of dealing with the PDEs. An interested reader will find several useful problems in Betounes (1998).Consider the definition And the trivaial equality Using these, ca..

Npv of the depreciation tax shield : (a) When using the APV methodology, what is the NPV of the depreciation tax shield? (b) When using the APV methodology, what is the NPV of the interest tax shield?

User Account

All Pages

Estimate the inventory loss

Reference no: EM131105003

Reference no: EM131105003

Questions Cloud

Reviews

Write a Review

Business Management Questions & Answers

What is the service

Motivation and emotions in decision making

Explain tacit and explicit knowledge

Behavioural-based interviewsgeneral electric uses behavior

Louis vuitton and the local adaptation challengeimagine you

Explain women and minorities in the workforce

Message is memorable perspective of employees

Project network and activity times

Elucidate how long does it take for a stop payment

Nominal rate semi-annual compounding

Communicating a new requirement to employees

Did i use an extemporaneous delivery style

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT