P Company Regularly Sells Merchandise to Its 80%-Owned Subsidiary, S

question 3

Multiple Choice

P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2016, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S's December 31, 2016 inventory. During 2017, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S's December 31, 2017 inventory. Selected income statement information for the two affiliates for the year 2017 is as follows: Consolidated cost of goods sold for P Company and Subsidiary for 2017 are:

• A) $2,260,500.
• B) $2,268,000.
• C) $2,276,700.
• D) $2,737,500.

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Definitions:

Break-Even Points

The financial stage at which revenues equal costs, leading to neither profit nor loss.

Marketing Strategy

A comprehensive plan formulated by a business to achieve specific marketing objectives and to appeal to its target market.

Competitor Strengths

The advantages or assets that give an organization or individual an edge over others in the same market or field.

Sales Goals

Specific objectives set by a business related to the amount of product or services sold within a particular timeframe.