On May 1 of the Current Year, Peck Company Experienced

question 170

Multiple Choice

On May 1 of the current year, Peck Company experienced a 500 year flood which destroyed the company's entire inventory. The company had not completed its month end reporting for April and must estimate the amount of inventory lost. At the beginning of April, the company reported beginning inventory of $215,450. Inventory purchased during April (until the date of the disaster) was $192,530. Sales for the month of April were $542,500. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.

• A) $87,480
• B) $134,520
• C) $109,980
• D) $82,480
• E) $81,480

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Definitions:

Variable Food Costs

Variable food costs change with the level of production or sales, such as the cost of ingredients for a restaurant.

Performance Evaluation

The process of assessing the efficiency and effectiveness of employees, departments, or organizations, often for the purpose of making decisions related to promotions, compensations, and training.

Other Departments

A general term that refers to various separate units or divisions within a company, each responsible for specific functions or operations not specified by previous terms.

Transfer Price

The cost at which products or services are exchanged between departments within the same corporation or among associated companies.