Use the Following Information for Questions Below
a Company

question 5

Multiple Choice

Use the following information for questions below
A company had the following inventory activity during May:
$\begin{array}{lrccc}&\text { Units }& \text { Unit Cost } & \text { Total Cost } & \text { Unit Price } \\\hlineBeginning~ inventory&100 & \$ 20.00 & \$ 2,000 & \\Purchase: ~November~3&900 & \$ 21.00 & 18,900 & \\Sale: \quad November ~5&(900) & & & \$ 30.00 \\Purchase: November ~15&1,000 & \$ 21.00 & 21,000 & \\Sale: \quad November~ 28&(900) & & & \$ 30.00\end{array}$
-If the company uses a perpetual system and the FIFO cost formula,what is the gross margin for the month?

• A)$12,100
• B)$16,200
• C)$16,300
• D)$17.100

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Definitions:

Production

The process of creating goods and services through the combination of labor, materials, and capital.

Coase Theorem

A principle that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of rights.

Free-Rider Problem

A situation where some individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production.

Public Good

A good that is both non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.