A Firm That Is Maximizing Its Profits by Producing a Certain

question 63

Multiple Choice

A firm that is maximizing its profits by producing a certain level of output must also be

• A)minimizing its cost of producing that output.
• B)maximizing its sales.
• C)minimizing its variable costs.
• D)maximizing its output.
• E)maximizing its revenue.

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Definitions:

Gross Profit Method

A technique used to estimate the amount of ending inventory using the gross profit margin.

Net Realizable Value

The expected selling price in the ordinary course of business minus the estimated costs of completion and the costs necessary to make the sale.

Normal Selling Price

The standard amount charged to customers for a good or service under normal market conditions.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, before any purchases or sales have occurred.