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Business, 25.03.2021 23:50 BigGirlsTheBest

Christmas Thoughts Company (CTC) is a company that manufactures and sells Christmas decorations and related products. Due to its seasonal business, sales are extremely strong during the months of November and December. During these two months, 60% of all annual sales are made. The remaining 40% of sales are distributed evenly over the other ten months (therefore, 4% for each of the ten months). CTC has very stable sales every year. The balance sheet for CTC for the past year is presented below. REVENUES: Net sales $40,000,000 EXPENSES: Cost of Goods Sold $20,500,000 Salaries of key employees $940,000 Salaries of other employees $2,200,000 Utilities $350,000 Other Expenses $2,600,000 Total Expenses $ 26,590,000 INCOME BEFORE TAXES $ 13,410,000 LESS TAXES (34%) $4,559,400 NET INCOME $ 8,850,600 What is the maximum probable business income loss for CTC for business income insurance coverage purposes if (1) the maximum probable length of a shutdown for CTC is three months, and (2) the continuing expenses CTC will incur during shutdown period includes only the salaries for key employees and utilities

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