Question

Marian’s Furs specializes in full-length mink coats. As of January 1, Marian had four top-of-the-line coats. Although the four coats are equivalent, they were purchased the previous year at different costs:
Cost
Coat 1 ....... $8,400
Coat 2 ....... 7,100
Coat 3 ....... 7,600
Coat 4 ....... 6,800
During January a customer decided to buy any one of the mink coats for $12,000. This was the only sale in January.
a. If Marian wished to maximize January’s profits and ending inventory, which of the minks would she have sold to the customer? Compute the gross profit on the sale and January’s ending inventory. Discuss why Marian might wish to maximize profits and ending inventory.
b. If Marian wished to minimize January’s profits and ending inventory, which of the minks would she have sold to the customer? Compute the gross profit on the sale and January’s ending inventory. Discuss why Marian might wish to minimize profits and ending inventory.



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  • CreatedAugust 19, 2014
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