The Following Information Pertains to Inventory Held by a Company

question 14

Multiple Choice

The following information pertains to inventory held by a company on December 31, 2013. What amount of inventory should be reported under U.S. GAAP?

• A) $16,000.
• B) $27,000.
• C) $30,000.
• D) $21,600.
• E) $20,000.

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Definitions:

Marginal Revenue

The extra revenue gained by selling an additional unit of a product or service.

Economies of Scale

Cost advantages that entities attain due to the scale of operation, with costs per unit of output generally decreasing with increasing scale.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the performance exceeding opportunity costs.