Tamarack Co

question 34

Multiple Choice

Tamarack Co.prepares its estimate of LCM using the net realizable value.Inventory item 101 cost $45 and its current replacement cost is $50.The item is currently selling in the market for $55 and selling costs are estimated to be $6.Tamarack expects to earn a profit of $4 on the sale of this item.In its year-end financial statements,Tamarack Co.should value this item at

• A)$50.
• B)$45.
• C)$49.
• D)$55.

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Definitions:

Incremental Costs

The additional costs incurred when a company increases production by one unit.

Special Order

An order that deviates from the normal production process or product line, often requiring special pricing and handling.

Net Operating Income

A financial calculation that represents a company's total income generated from its operations, minus its operating expenses, excluding taxes and interest.

Fixed Expenses

Costs that remain constant for a given period regardless of the level of production or sales, such as rent or salaries.