Carrolton, Inc

question 37

Essay

Carrolton, Inc. currently sells widgets for $80 per unit. The variable cost is $30 per unit and total fixed costs equal $240,000 per year. Sales are currently 20,000 units annually.

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Definitions:

Gross Method

An accounting method used in invoicing that records the full price of goods or services without deducting any sales discounts upfront.

Credit Terms

Conditions under which credit is granted, including repayment period, discount for early payment, and interest rate.

Periodic Inventory System

An accounting method in which inventory levels and cost of goods sold are determined at the end of an accounting period based on a physical count.

Gross Method

An accounting approach that documents purchases at their complete invoice cost without subtracting any offered cash rebates.