A Company Has the Following Per Unit Original Costs and Replacement

question 146

Multiple Choice

A company has the following per unit original costs and replacement costs for its inventory: Part A: 50 units with a cost of $5 and replacement cost of $4.50.
Part B: 75 units with a cost of $6 and replacement cost of $6.50.
Part C: 160 units with a cost of $3 and replacement cost of $2.50.
Under the lower of cost or market method,the total value of this company's ending inventory must be reported as:

• A)$1,180.00.
• B)$1,075.00.
• C)$1,112.50 or $1075.00,depending upon whether LCM is applied to individual items or the inventory as a whole.
• D)$1,112.50.
• E)$1180.00 or $1075.00,depending upon whether LCM is applied to individual items or to the inventory as a whole.

Analyze the effects of marginal cost changes on monopolist's output and pricing decisions.

Understand how monopolists determine the profit-maximizing level of output and price.

Identify scenarios in which monopolists experience economic profits or losses.

Understand the relationship between average total cost, marginal cost, and the pricing strategies of a monopolist.

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Definitions:

Sale of Equipment

The process of disposing or selling a company's equipment assets, which may result in a gain or loss reflected in the income statement.

Direct Method

A method of presenting the cash flow statement where cash receipts and cash payments from operating activities are disclosed, offering a clearer understanding of cash flows.

Statement of Cash Flows

An account that illustrates the impact of variations in income and balance sheet positions on cash and similar assets.

Indirect Method

A method for presenting cash flow from operations that begins with net income and makes adjustments for transactions that do not involve cash.