Esposito Is an Italian Subsidiary of a U

question 31

Multiple Choice

Esposito is an Italian subsidiary of a U.S. company. Esposito's ending inventory is valued at the average cost for the last quarter of the year.
The following account balances are available for Esposito for 2013: Compute ending inventory for 2013 under the current rate method.

• A)$13,950.
• B)$14,100.
• C)$14,400.
• D)$14,850.
• E)$15,150.

---

Definitions:

Total Sales Revenue

The overall income generated from selling goods or services before any expenses are subtracted.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Margin of Safety

This measures the difference between actual sales and sales at the break-even point, indicating the amount by which sales can drop before losses start occurring.

CVP Analysis

Cost-Volume-Profit Analysis, a business management tool used to determine how changes in costs and volume affect a company's operating income and net income.