Better Buy Has Six CD Players in Inventory on December

question 44

Multiple Choice

Better Buy has six CD players in inventory on December 31. The players were purchased in November for $170. The price lists from suppliers indicate the current replacement cost of a CD player to be $168. What is the effect on gross profit if Better Buy values its ending merchandise inventory using the lower-of-cost-or-market rule?

• A)The gross profit would increase by $2.
• B)The gross profit would not be affected.
• C)The gross profit would decrease by $12.
• D)The gross profit would increase by $12.

Understand the role of disruption in creating and defining new markets or transforming existing ones.

Understand the importance of sample size in data visualization.

Identify methods that can distort impressions in graphical representations.

Recognize how the choice of scale affects the interpretation of graphs.

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Definitions:

Variable Manufacturing Cost

Direct costs associated with manufacturing, changing with the level of output, including direct materials, direct labor, and variable manufacturing overhead.

Production Volume

The total quantity of goods produced within a specific period by a manufacturing entity.

Engineering Approach

A detailed analysis of cost behavior based on an industrial engineer’s evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.

Mixed Costs

Expenses that have both fixed and variable components, changing with the level of activity but having a base cost.