A Company Has the Following Per Unit Original Costs and Replacement

question 2

Multiple Choice

A company has the following per unit original costs and replacement costs for its inventory:
Part A: 10 units with a cost of $3 and replacement cost of $2.50
Part B: 40 units with a cost of $9 and replacement cost of $9.50
Part C: 75 units with a cost of $8 and replacement cost of $7.50
Under the lower of cost or market method,the total value of this company's ending inventory is:

• A)$990.00
• B)$947.50
• C)$967.50 or $947.50,depending upon whether LCM is applied to individual items or the inventory as a whole
• D)$967.50
• E)$990.00 or $947.50,depending upon whether LCM is applied to individual items or to the inventory as a whole

Understand and apply the concept of sunk cost, opportunity cost, and differential cost in business decisions.

Calculate the net operating income using the contribution approach.

Develop equations for cost formulas based on variable and fixed components.

Understand the concept of incremental costs in the decision-making process.

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Definitions:

Revenue Driver

Key factors or activities that significantly influence or contribute to the generation of income for a business.

Presales Costs

Expenses incurred during the preliminary phase of a sales process, such as market research, product development, and pitch preparation, before actual sales begin.

Cost Of Goods Sold

The immediate expenses linked to the creation of products sold by a business, such as materials and labor.

Financial Report

A formal record of the financial activities and position of a business, person, or other entity, typically prepared on a quarterly or annual basis.