The Producer Surplus of Making and Selling 10 Chairs Is

question 331

Multiple Choice

The producer surplus of making and selling 10 chairs is found by

• A) multiplying the selling price by 10.
• B) subtracting the marginal cost from the selling price for each chair and summing the differences for all 10 chairs.
• C) subtracting from the total revenue the cost of producing one chair multiplied by 10.
• D) adding the marginal cost and the price of all 10 chairs.
• E) None of the above answers is correct.

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Definitions:

Ending Inventory

The cost of merchandise ready to be sold at the close of an accounting cycle, found by taking the initial inventory, adding purchases, and subtracting the cost of goods sold.

Inventory Valuation

The method used to assign a monetary value to inventory, which affects the cost of goods sold and gross profit.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in cost accounting.

Ending Inventory

The aggregate worth of items on offer at the termination of an accounting cycle.