For Each Independent Situation Given Below, Determine the Effect on Pretax

question 2

Essay

For each independent situation given below, determine the effect on pretax profit for each. Enter "+" to indicate pretax profit is overstated, "-" to indicate pretax profit is understated, or "NA" to indicate that pretax profit is not affected. $\quad$$\quad$$\text { Independent Situations }$ $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ $\text { Effect on Pre-tax Profit }$$\begin{array} { | l | l | l | l | } \hline && 20 X1 & 20X 2 \\\hline \text { A. } & 20 \times 1 \text { ending inventory overstated } & & \\\hline \text { B. } & 20 \times 1 \text { ending inventory understated } & & \\\hline \text { C. } & 20 \times 2 \text { ending inventory overstated } & & \\\hline \text { D. } & 20 \times 2 \text { beginning inventory overstated } & & \\\hline \text { E. } & 20 \times 1 \text { beginning inventory understated } & & \\\hline \text { F. } & \begin{array} { l } 20 \times 2 \text { beginning inventory understated and 20X2 } \\\text { ending inventory understated by the same amount }\end{array} & & \\\hline\end{array}$

Apply the concept of marginal analysis to pricing and consumption decisions.

Interpret and analyze diagrams and tables related to marginal and total benefits.

Understand the concept of marginal analysis and how it applies to decision making in various contexts.

Analyze the impact of changes in marginal benefit and marginal cost on optimal decision making.

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Definitions:

Decision

The process of making choices among alternative courses of action.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not affect future business decisions.

Future Costs

Costs that will be incurred in the future, impacting decisions on investments, production, and other business activities.

Relevant

Relates to or directly impacts the subject under discussion.