P 9-5 Gross profit method (1) QL09-2 Smith Distributors, Inc., supplies ice cream shops with various toppings for making sundaes. On November 17, 2021, a fire resulted in the loss of all of the toppings stored in one section of the warehouse. The company must provide its insurance company with an estimate of the amount of inventory lost. The following information is available from the company's accounting records: Fruit Marshmallow Chocolate Toppings Toppings Toppings Inventory, January 1, $ 20,000 $ 7,000 $ 3,000 2021 Net purchases through Nov. 150,000 36,000 12,000 Fruit Toppings Marshmallow Choc ) Toppings Toppmgs Inventory, January 1, 2021 $ 20,000 $ 7,000 $ 3,000 Net purchases through Nov. 150,000 36,000 12,000 17 Net sales 200,000 55,000 20,000 through Nov. 17 Historical gross profit ratio 20% 30% 35% Required: 1. Calculate the estimated cost of each of the toppings lost in the fire. 2. What factors could cause the estimates to be over- or understated