Question

Assume that TrueTech sold 1,000 Tri-Boxes to CompStores for $240 each. TrueTech estimates that CompStores will return five percent of the Tri-Boxes purchased.

Answer 1

The student's question about estimating product returns and adjusted sales revenue involves calculating the value of expected returns (5% of 1,000 Tri-Boxes at $240 each) and subtracting this value from the initial sales revenue to determine the net revenue.

Step-by-step explanation:

The question involves a business scenario where TrueTech sold 1,000 Tri-Boxes to CompStores for $240 each. TrueTech anticipates that CompStores will return 5% of the Tri-Boxes purchased.

To address the situation, we calculate the estimated returns and the sales revenue after accounting for these returns. If CompStores returns 5% of the Tri-Boxes, it means they are expected to return 50 Tri-Boxes (5% of 1,000).

The value of these returns would be 50 Tri-Boxes × $240 per Tri-Box = $12,000 total returns. Consequently, the adjusted sales revenue would be the initial total sales minus the expected returns, which is (1,000 Tri-Boxes × $240 per Tri-Box) - $12,000 from returns, resulting in a net sales revenue of $228,000.