If the Estimated Rate of Gross Profit Is 30%, What

question 149

Multiple Choice

If the estimated rate of gross profit is 30%, what is the estimated cost of the inventory on September 30, based on the following data? $$\begin{array} { l l r } \text { Sep. } 1 & \text { Inventory (at cost) } & \$ 125,000 \\\text { Sep. 1-30 } & \text { Purchases, net (at cost) } & 300,000 \\\text { Sep. 1-30 } & \text { Sales } & 150,000\end{array}$$

• A) $320,000
• B) $192,500
• C) $275,000
• D) $105,000

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Definitions:

Financial Advantage

A benefit enjoyed by an entity that puts it in a stronger financial position, such as lower costs, greater revenues, or superior investment returns.

Avoidable Expenses

Costs that can be eliminated if a particular decision is made, such as discontinuing a product or service.

Fixed Manufacturing Expenses

Fixed expenses that are not affected by changes in production or sales quantities, like rent, salaries, and insurance.

Fixed Selling Expenses

Costs associated with the selling process that do not vary with sales volume, such as salaries of sales staff and advertising fees.