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Thompsons Inc. just finished their fiscal year and are preparing the P&L. They had sales of $1M. The direct material cost was based on their computerized inventory control system was valued at $400K. Direct labor was valued at 200K, using their new time management system. The overhead was valued at 200K, based on their standard allocation method. Based on this information they calculated their preliminary gross profit at $200K. A decision was made to conduct a complete physical inventory. After completion, the direct material cost changed to 450K, What is the new gross profit?
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