The gross profit method is often used for calculating inventory destroyed by a disaster, such as a fire.

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The gross profit method is a commonly used technique for estimating the value of inventory destroyed by a disaster such as a fire. This method is based on estimating the cost of the goods sold as a percentage of the gross profit. By applying this percentage to the estimated sales, it is possible to determine the cost of the lost inventory.

The Gross Profit Method Is Often Used for Calculating Inventory