Hattie Cao Operates Peachy Keen and Sells Her Products Through

question 136

Multiple Choice

Hattie Cao operates Peachy Keen and sells her products through catalogue orders. Cao produces and sells seven kinds of peach pies,three kinds of peach cakes,two kinds of peach cookies,and a peach salsa. She normally keeps 250 jars of salsa in stock,but she noticed today that she has more than 500 bottles in her inventory. According to the textbook,what should Cao do with her excess inventory?

• A)She should cut prices on the salsa to increase its sales. 
• B)She should donate the salsa and get a tax write off. 
• C)She should throw the excess away. 
• D)She should send out the salsa as a free sample to potential customers.

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Definitions:

Modified Cash Basis

It is an accounting method that combines elements of the cash basis and accrual basis, recording income when received but expenses when incurred.

Research and Development

This is a set of activities intended to improve existing products or services or to create new ones, often involving scientific or technological innovation.

Straight-Line Depreciation

An approach to evenly spread out an asset's expense over its lifespan.

Overhead Allocation

The process of distributing indirect costs to various cost objects, such as products or departments, to accurately reflect the resources consumed by each.