A company has inventory of $200,000 in a warehouse that is completely destroyed by fire. There is no insurance to cover this loss. The cost to replace the inventory is $250,000. What inventory cost should the manger use to estimate economic profit?
A company has inventory of $200,000 in a warehouse that is completely destroyed by fire. There is no insurance to cover this loss. The cost to replace the inventory is $250,000. What inventory cost should the manger use to estimate economic profit?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 7.5IP
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![A company has inventory of $200,000 in a warehouse that is
completely destroyed by fire. There is no insurance to cover
this loss. The cost to replace the inventory is $250,000.
What inventory cost should the manger use to estimate
economic profit?
O a. 250000
O b. -50000
O c. 50000
O d. -200000
О е. 200000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc5f15f39-fd37-4447-9c38-7ebe4d8fb965%2Fcaccacbc-90c3-438e-8bf0-23f8ad55ff76%2F31mf3x8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company has inventory of $200,000 in a warehouse that is
completely destroyed by fire. There is no insurance to cover
this loss. The cost to replace the inventory is $250,000.
What inventory cost should the manger use to estimate
economic profit?
O a. 250000
O b. -50000
O c. 50000
O d. -200000
О е. 200000
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