Collins Computers Stored Its Inventory in a Warehouse That Was

question 27

Multiple Choice

Collins Computers stored its inventory in a warehouse that was destroyed by a fire in late November,2014.Its sales office was at a different location.In order to file a claim with the insurance company,the company's manager asks you to estimate the inventory in the warehouse.The following information is available: The company's gross profit has historically been 40% of Net sales revenue.Estimate the value of the inventory destroyed in the fire using the gross profit method.

• A)$369,950
• B)$528,550
• C)$410,000
• D)$388,450

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Definitions:

Utility Function

A mathematical model that describes how a person ranks choices based on perceived utility, happiness, or satisfaction.

Consumption

The act of using goods and services by households or individuals, leading to the satisfaction of needs and wants.

Price

The price in terms of cash expected, necessary, or donated in exchange for a commodity.

Demand Function

An equation showing the relationship between the quantity of a good consumers want to buy and its price, alongside other factors like income and prices of related goods.