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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Laissez-Faire

An economic philosophy of free market capitalism that opposes government intervention.

Antipoverty Programs

Government or organizational initiatives designed to reduce poverty through financial aid, education, or job training.

Labor Relations

The study and practice of managing relationships between employers and employees, focusing on negotiation, collective bargaining, and working conditions.

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