Scenario 8-1 CANOES-R-US Makes Canoes.It Buys the Shell of the Canoe from Canoe

question 36

Multiple Choice

Scenario 8-1
CANOES-R-US makes canoes.It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe.It sells the finished canoe to a retail canoe store for $800.The retail canoe store then sells the canoe to a consumer for $1,200.
-Refer to Scenario 8-1.The value added of CANOES-R-US for each canoe equals

• A)$1,200.
• B)$800.
• C)$500.
• D)$400.

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Definitions:

Period Cost

Expenses incurred that are not directly tied to the production process, such as administrative, selling, and marketing costs.

Total Manufacturing Costs

The sum of all costs directly related to the production of goods, including direct materials, direct labor, and manufacturing overhead.

Raw materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for production.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased by consumers.