Doc Gibbs Company reported the following information for November and December 2010.

November

December

Cost of goods purchased

$500,000

$ 610,000

Inventory, beginning of month

100,000

120,000

Inventory, end of month

120,000

????

Sales

800,000

1,000,000

Doc Gibbs’s ending inventory at December 31 was destroyed in a fire.

Instructions

(a) Compute the gross profit rate for November.

(b) Using the gross profit rate for November, determine the estimated cost of inventory lost in the fire.