A Company Had Been Selling Its Product for $20 Per

question 119

Multiple Choice

A company had been selling its product for $20 per unit,but recently lowered the selling price to $15 per unit.The company's current inventory consists of 200 units purchased at $16 per unit.The replacement cost of this merchandise is currently $13 per unit.At what amount should the company's inventory be reported on the balance sheet under the lower of cost or market rule?

• A)$2,600
• B)$3,200
• C)$3,000
• D)$4,000

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Definitions:

Direct Expenses

Costs that can be directly attributed to a specific product, service, or project, such as raw materials and labor.

Net Loss

A net loss occurs when a company's total expenses exceed its total revenues during a specific accounting period, indicating a negative financial performance.

Export Cost

Expenses associated with sending goods or services to another country for sale or trade.

Variable Manufacturing Costs

Costs that vary directly with the level of production output, including expenses like raw materials and hourly labor costs.