The Following Information Is Available from the Trial Balance of Valentines

question 6

Multiple Choice

The following information is available from the trial balance of Valentines company as at 31 Dec Year 3:
$$\begin{array} { l c c } & \text { Debit } & \text { Credit } \\& £ & £ \\\text { Sales revenue } & & 110,000\\\text { Inventory at 31st Dec Year 1 } & 7,000 \\\text { Purchases } & 18,750 &\end{array}$$
Closing inventory as at 31st Dec year 3 is £5,250.Calculate the gross profit.

• A) £141,000
• B) £79,000
• C) £89,500
• D) £130,500

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Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, representing the cost per unit.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for competition based on quality, price, and brand.

Long-Run Equilibriums

A state in a market where all firms are making zero economic profit, and no new firms enter or exit the industry, resulting in a stable market condition over time.

Interdependent Firms

Businesses whose decisions and performance affect and are affected by the decisions and performance of other firms within the market.