On June 30 a Company Needed to Estimate Its Ending

question 68

Multiple Choice

On June 30 a company needed to estimate its ending inventory to prepare its second quarter financial statements. The following information is available: Beginning inventory, April 1: $6,000
Net sales: $70,000
Net purchases: $36,000
The company's gross margin ratio is 12%. Using the gross profit method, the cost of goods sold would be:

• A)$8,400
• B)$34,000
• C)$61,600
• D)$40,000
• E)$35,200

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Definitions:

Industry

The organized economic activity related to the production, processing, and marketing of goods and services.

Interindustry Competition

Competition among firms that operate in different industries but compete for the same set of customers or inputs.

Oligopolistic Producers

Firms within a market structure where a small number of companies have the majority of market share and thus can significantly influence price and production levels.

Purely Competitive

Describes a market structure where many sellers offer identical products, and no single seller can influence the market price.