A Company Normally Sells Its Product for $20 Per Unit

question 63

Multiple Choice

A company normally sells its product for $20 per unit.However,the selling price has fallen to $15 per unit.This company's current inventory consists of 200 units purchased at $16 per unit.Replacement cost has now fallen to $13 per unit.What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?

• A)$1,000.
• B)$1,400.
• C)$400.
• D)$600.
• E)$800.

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Definitions:

Buyers

Individuals or entities that purchase goods or services from sellers in exchange for money or other valuable considerations.

Sellers

Entities or people who make products or services available for purchase in the market.

Total Surplus

A measure combining the gains of consumers and producers, indicating the overall economic benefit derived from transactions.

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditures.