A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory?

Question

Quizplus · Accepted Answer

The estimated cost of the lost inventory is $45,000. The gross profit ratio is 35%, which means that the cost of goods sold is 65% of sales. Therefore, the cost of the lost inventory is 65% of $45,000, which is $29,250.

A Company's Warehouse Was Destroyed by a Tornado on March