A Company Manufactures and Sells Four Products; the Related Inventories

question 2

Multiple Choice

A company manufactures and sells four products; the related inventories are valued at lower-of-cost-or-market. The company considers a profit margin of 20 percent of sales to be normal for all four products. The following information was compiled as of December 31: $\begin{array} { | l | l | l | l | l | } \hline \text { Product } & \text { Original Cost } & \text { Cost to Replace } & \text { Estimated Cost to Complete and sell } & \text { Expected Selling Price } \\\hline \text { A } & \$ 70 & \$ 84 & \$ 30 & \$ 160 \\\hline \text { B } & 94 & 90 & 41 & 190 \\\hline \text { C } & 35 & 30 & 10 & 60 \\\hline \text { D } & 90 & 92 & 118 & 200 \\\hline\end{array}$
Using lower-of-cost-or-NRV, the reported unit amount of the ending inventory for Product D is:

• A) $90
• B) $92
• C) $82
• D) $118

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Definitions:

Extrinsic Factors

External influences or circumstances that can affect an individual's motivation, behavior, and conditions without being inherent to the task or subject itself.

Expectancy Theory

Developed by Victor Vroom to explain human behavior in terms of people’s goals, choices, and the expectation that goals will be reached.

Organizational Climate

The overarching environment and culture within a company, shaped by shared perceptions and attitudes of its employees.

Worker Morale

The overall outlook, attitude, satisfaction, and confidence that employees feel at work.