In August 2008, Ethan Nicholas Developed the IShoot Application for the Apple

question 9

Multiple Choice

In August 2008, Ethan Nicholas developed the iShoot application for the apple iPhone 3G, and within five months had earned $800,000 from this program. By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales. This example indicates that in a competitive market,

• A) earning an economic profit in the long run is extremely easy.
• B) earning an economic profit in the long run is extremely difficult.
• C) it is impossible to earn an economic profit in either the short run or the long run.
• D) economic profits are only earned in the long run.

Understand the legal and accounting aspects of FOB shipping point and FOB destination terms.

Differentiate between variable costs (e.g., freight-in costs, production supervisory salaries) that contribute to inventory valuation and those that do not (e.g., freight-out costs, selling costs).

Understand the principles of inventory costing methods including FIFO, LIFO, and weighted average.

Calculate cost of goods sold and ending inventory using different inventory costing methods.

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Definitions:

Fixed Selling

Expenses that remain constant regardless of the level of sales or production, such as salaries of sales managers and rental charges of retail spaces.

Eliminating Product

The process of removing a product from a company's offerings, often due to low sales, obsolescence, or strategic repositioning.

Segment Margin

A segment’s contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs.

Special Equipment

Custom or unique machinery, tools, or apparatus required for specific tasks or production processes not typically found in generic manufacturing settings.