Because Commissions Are a Large Component in Selling Costs for a Firm

question 22

Essay

Because commissions are a large component in selling costs for a firm, cost of disposal averages 20 percent of selling price. Historical data has revealed the normal profit margin of the company has averaged 10 percent of sales. Per unit cost and selling price, for five different kinds of inventory items are given below. The five cases are independent. Under lower-of-cost-or-market, fill in the proper reported value of a unit of the inventory for each of the five cases: $\begin{array}{|l|l|l|l|l|l|}\hline & 1 & 2 & 3 & 4 & 5 \\\hline \text { Units cost } & \$ 80 & \$ 100 & \$ 160 & \$ 230 & \$ 90 \\\hline \text { Selling price } & 100 & 120 & 200 & 300 & 100 \\\hline \text { Replacement cost } & 68 & 94 & 172 & 220 & 88 \\\hline \text { Inventory value }&---&----&---&----&----\\\hline\end{array}$

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Definitions:

Communications

The process of transmitting information, ideas, and feelings through various means, including verbal, non-verbal, written, and digital channels.

Reorganization

The process of restructuring the operations, policies, or structure of an organization to improve efficiency or adapt to new conditions.

Competitive Strategy

A long-term plan of action designed to achieve a competitive advantage over rivals in the industry.

New Products

Items or services that have been recently introduced to the market, offering new or enhanced features compared to existing offerings.