In Applying the Lower of Cost and Net Realizable Value

question 129

Multiple Choice

In applying the lower of cost and net realizable value (NRV) to inventory valuation, NRV is defined as:

• A) Historical cost.
• B) Estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
• C) Current sales price.
• D) FIFO.
• E) LIFO.

Understand various approaches to product pricing, including cost-plus pricing.

Understand the principles of activity-based costing and its advantages over traditional costing systems.

Recognize the factors influencing pricing decisions, including cost-plus and variable cost concepts.

Identify the concepts of sunk cost, differential cost, and opportunity cost in decision-making processes.