P19 - 104. in applying the lower of cost or market method to inventory valuation, market is defined as:

1 answer:

8 0

<span>lower-of-cost-or-market It is inconsistent because losses are recognized but not gains. b. It usually understates assets. c. It can increase future income. "market" in the lower-of-cost-or-market rule be more than estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal. Designated market value is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin Lower-of-cost-or-market is most conservative if applied to individual items of inventory. the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory is to prevent overstatement of the value of obsolete or damaged inventories.</span>

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Answer:

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<u>Explanation:</u>

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The per-unit economic profit at the profit-maximizing output is $112 if the product price is $283.

<h3>How do we calculate profit-maximizing price?</h3>

The rule for calculating a profit-maximizing perfectly competitive firm is to produce the level of output where Price equals the Marginal Revenues= Marginal cost.

Hence, the economic profit is calculated by Total Revenue - (Explicit Costs + Implicit Costs) because it entails the difference between the revenue received from the sale of an output and the costs of all inputs.

Therefore, the per-unit economic profit at the profit-maximizing output is $112 if the product price is $283.