Big Sky Ltd

question 14

Essay

Big Sky Ltd. attempts to price merchandise so as to yield a gross margin of 25 percent based on selling price. If the inventory on August 1 was $30,000 and sales and purchases during August and September were as given below, compute a reliable estimate of the inventory at the end of each month. $\begin{array} { | l | l | l | l | } \hline \text { Month } & \text { Sales } & \text { Purchases } & \text { Ending Inventory } \\\hline \text { August } & \$ 160,000 & \$ 126,000 & \$ \\\hline \text { September } & 180,000 & 128,000 & \$ \\\hline\end{array}$

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Definitions:

Total Revenue

The overall amount of money received by a company for goods sold or services provided during a certain time period.

Total Revenue

The total receipts a firm receives from sales of its product or services.

Total Revenue

The overall amount of money generated by a firm from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Perfectly Inelastic Demand

The case in which the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line.