Which of the Following Formulas Would Calculate the Net Realizable

question 30

Multiple Choice

Which of the following formulas would calculate the net realizable value of a product?

• A) sales value at the split-off point less cost to produce up to the split-off point
• B) sales value x constant gross-margin
• C) final sales value minus cost of goods sold
• D) final sales value minus separable costs

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Definitions:

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses and costs incurred in operating the business.

Producing Units

Entities, either facilities or machinery, involved in the production process to manufacture goods or services.

Economy

The system of production, distribution, and consumption of goods and services in a particular geographic region or country.

Factor Markets

Markets where services of the factors of production (notably labor, land, and capital) are bought and sold.