Ted's Used Cars Uses the Specific Identification Method of Costing

question 58

Multiple Choice

Ted's Used Cars uses the specific identification method of costing inventory. During March, Ted purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Ted determines that at March 31, the $9,750 car is still on hand. What is Ted's gross profit for March?

• A) $5,250.
• B) $4,500.
• C) $750.
• D) $8,250.

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Definitions:

Perfect Competitor

A theoretical market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to efficient pricing and resource allocation.

Long Run

In economics, the long run refers to a period in which all factors of production and costs are variable, allowing for adjustment to changes in market conditions.

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.

Marginal Cost

The increase in cost resulting from the manufacture of one extra product or service unit.