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On 1 september 20X8 Winston had inventrory of 380k. During the month sales totalled 650k and purchases 480k. On 30 september 20X8 a fire destroyed some of the inventroy. the undamage goods were valued 220k.
the business operates with a 30% gross profit marginWhat’s is the cost of the inventory destroyed ?
the answer is 185k
Could you please explain the steps to get at this result ?
Many Thanks
You can calculate what the cost of the inventory should be, by taking the cost of sales and adjusting for the opening inventory and the purchases
The difference between this and the undamaged goods is the cost of the inventory destroyed.
I work through examples like this in my free lectures on mark-ups and margins. The lectures are a complete free course and cover everything needed to be able to pass the exam well.
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