Given the Historical Cost of Product Z Is $40, the Selling

question 73

Multiple Choice

Given the historical cost of product Z is $40, the selling price of product Z is $50, costs to sell product Z are $6, the replacement cost for product Z is $41, and the normal profit margin is 40% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison?

• A) $40.
• B) $42.
• C) $41.
• D) $22.

---

Definitions:

Clever Hans

Refers to a case study from early 20th century of a horse that was claimed to perform arithmetic and other intellectual tasks, later found to be responding to involuntary cues from humans.

Flashing Signals

Lights that blink on and off to convey messages, warnings, or signals, commonly used in road traffic controls and electronic devices.

Principle of Parsimony

A methodological principle suggesting that the simplest explanation is often the correct one when comparing theories with equal predictive capabilities.

Parsimonious

A characteristic of an explanation or theory that requires the fewest assumptions, variables, or changes to be effective or accurate.