On March 17, 2009, a Flood Destroyed the Entire Inventory

question 7

Essay

On March 17, 2009, a flood destroyed the entire inventory of Beatty Co. The following information is available from its accounting records:
Required: Compute the estimated cost of inventory lost in the flood.
$\begin{array}{lr}\text { Inventory, January 1, 2009 } & \$ 208,000 \\\text { Purchases, Jan. 1 - Mar. 17 } & 420,000 \\\text { Sales, Jan. 1 - Mar. 17 } & 600,000 \\\text { Normal gross margin } & 40 \%\end{array}$

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Definitions:

Rapid Changeovers

Techniques and practices implemented to reduce the time and effort required to switch a production line or system from making one product variant to another.

Mass Customization

A manufacturing approach that combines the efficiency of mass production with the ability to customize products to meet individual customer preferences.

Repetitive Process

A production process in which the same sequence of operations and tasks are repeated over and over to produce identical or very similar products.

Equipment Utilization

A measure of how effectively a piece of equipment is being used, typically expressed as a percentage, indicating the ratio of actual operating time to available time.