Cammy Company Had Inventory at the End of the First

question 25

Multiple Choice

Cammy Company had inventory at the end of the first quarter having a cost of $420,000 and a market value of $410,000.Cammy recognized a $10,000 loss in its first quarter financial statements due to market declines.At the end of the second quarter, the inventory had a cost of $450,000, and a market value of $480,000.Cammy's action in the second quarter should be:

• A)​nothing.
• B)​recognize a $30,000 gain due to market recoveries.
• C)​recognize a $10,000 gain due to market recoveries.
• D)​recognize a recovery based on the first quarter write-down multiplied by the gross profit percentage.

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Definitions:

Unit Cost Trends

Analysis of how the cost required to produce a single unit of a product changes over time, which can indicate efficiency improvements or the need for adjustments in pricing strategies.

Continuous Improvement

An ongoing effort to improve products, services, or processes by making small, incremental changes over time.

Direct Materials Price

The cost per unit of raw materials that are used directly in the production of goods.

Nonmanufacturing Costs

Expenses that are not directly related to the production of goods, including selling, general, and administrative expenses.