# See if you can get this Maths Question right

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He's out \$97

#### otispunkmeyer

##### Lifer
Originally posted by: ZachMarius
He's out \$97

but more than likely he is out by £1000's since he'll have bought a decent sized stock of goods and has only sold one so far, because he's crap

#### dfi

##### Golden Member
Originally posted by: Amused
Originally posted by: mchammer187

it should be wholesale price

Lost profits are still a loss.

Go to sec.gov. Look up any public company and look at their annual financials (10KSB). Take a look at the disclosure on inventory. Inventory is valued at the lower of cost or market.

What happens when there are shortages in inventory, i.e. due to theft? You debit your expense, and credit your inventory at the lower of cost of market. If you were to debit your inventory at the higher of cost or market, you would be understating your inventory and overstating expenses.

If you want to say you lost the margins due to theft, that would mean you would have to record inventory at the selling price. Imagine if you recorded inventory at the selling price:

cost per unit: \$10
selling price: \$20

You buy 1 unit and record inventory at selling price:
Dr. inventory \$20
Cr. cash \$10

Your books are out of balance, unless you also record:

Cr. profit \$10

So that if you lost the inventory due to theft, you could:

Dr. profit \$10
Dr. expense \$10
Cr. inventory \$10

The problem here is that you recorded profit before any sale was made.

You can say that the margin is your unrealized profit, which is lost due to theft. That is, assuming that your inventory is not obsolete.

Using the above inventory unit cost of \$10 and selling price of \$20. Imagine if you had an extraordinary loss, and the insurance company came to access the damage of your 1 unit of destroyed inventory. If you claimed a \$20 loss and the insurance gave you \$20 without any inquiry or assessment, that would mean you could purchase another unit at \$10, selling that newly acquired unit for \$10 and make your gross margins of \$10, and still make an additional settlement profit of \$10, resulting in a net income of \$20. But since your gross margin on the sale of a unit is \$10, that would mean the difference between the net income of \$20 and your margin of \$10 is the overclaim you made to the insurance company. Or in other words, your loss/claim should have been for only \$10 dollars, the cost of the unit.

dfi

#### MobiusPizza

##### Platinum Member
Okay I get what you mean guys
However; of course the insurance company would judge on the current market level to see if your marked price is within the accepted marketing limits. I am sure if your marked price is not extraordinary and within market level; your insurance company will pay for your marked price.

But take it at a different angle (Again I didn't invent the question nor the answer)
Without business intent; nor anything to do with insurance company:

If the question is modified so that:
What's the loss of the shopkeeper given the fact that if the customer did not cheat the transaction would be a success?

If the customer didn't know the money is fake
Then I'd say the shopkeeper lost \$100
Shopkeeper: "The customer stole my product and so I lost \$21"
Which is what you would say and put down in your diary if you are the shopkeeper

If the customer intended to cheat, the true loss of the shopkeeper is \$97
"The theft just stole my product which costs me \$18"

#### UlricT

##### Golden Member
random question for OP: Are you Indian? (Saw you said Maths in the Title... was curious)

#### amol

##### Lifer
Originally posted by: UlricT
random question for OP: Are you Indian? (Saw you said Maths in the Title... was curious)

haha, i wondered that too

#### dighn

##### Lifer
i think the brits also say maths

#### DrPizza

##### Administrator Elite Member Goat Whisperer
I thought most of the English speaking world, outside the U.S. uses "maths"
It makes more sense, but we're just used to "math" in the U.S., hence it sounds funny to us.

#### OCNewbie

##### Diamond Member
Originally posted by: royaldank
This is like the bellhop riddle.

Three guys pay for a \$150 room with a \$50 bill each. Shopkeeper decides he overcharged \$5 and sends it up with the bellboy. He tells the guys and shows them the \$5. They decide to each take \$1 from the bellboy and let him have the extra \$2. So, each guy paid \$49 which equals \$147. Now, add the \$2 the bellboy has in his pocket and that's only \$149. Where's the extra dollar.

The part in bold is incorrect.

#### jagec

##### Lifer
Originally posted by: OCNewbie
Originally posted by: royaldank
This is like the bellhop riddle.

Three guys pay for a \$150 room with a \$50 bill each. Shopkeeper decides he overcharged \$5 and sends it up with the bellboy. He tells the guys and shows them the \$5. They decide to each take \$1 from the bellboy and let him have the extra \$2. So, each guy paid \$49 which equals \$147. Now, add the \$2 the bellboy has in his pocket and that's only \$149. Where's the extra dollar.

The part in bold is incorrect.

Depends on how you word it. Each guy paid \$49....TOTAL, including the amount they "tipped" the bellboy. So, \$147 paid - \$2 tip = \$145 for the room.

As for the original maths question, it depends whether you want us to factor in the time value of money, not to mention the lost profit from the item which can no longer be sold

#### OCNewbie

##### Diamond Member
Gah, after much hair pulling I figured this one out. This part of the riddle is the problem "Now, add the \$2 the bellboy has in his pocket and that's only \$149. Where's the extra dollar." With this sentence they're implying that you should have a total of \$150. But the \$147 total = the \$145 room charge (\$150 - \$5 discount) + the \$2 tip for the bell boy. So \$147 is the correct number, and adding another \$2 to that total is redundant.

#### imported_takuma

##### Member
I would say he lost 100 but spent 118 since he bought the thing anyway.

#### Clauzii

##### Member
It is quite funny how many different answers a question like this gets

Actually the customer lost 3\$ caus´ the costprice was only 18 and not 21\$

That´s why Mr. Anderson only lost 97\$....

#### SVT Cobra

##### Lifer
this whole question just shows the idiocy in the people behind our public education system. The question is worded horribely...and do not get me started on the new SAT's