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DIA [1.3K]
3 years ago
5

A manufacturer produces 500,000 MP3 players in the first quarter of the year. It sells 400,000 of them and adds 100,000 of them

to inventory. All the players added to inventory are purchased by consumers in the second quarter. How are the 100,000 that go into inventory counted in GDP?
Business
1 answer:
Digiron [165]3 years ago
3 0

Answer:

$100,000 is accounted in first quarter GDP as change in inventory

Explanation:

Changes in inventory is accounted in the current period GDP as it is an investment. It is a part of gross private investment of GDP. Changes in inventory happens when closing inventory differs from opening inventory.

When sales are more than goods produced, it indicates that the company has purchased its own inventory for investment purpose.

In this case $100,000 inventory in quarter 1 would be included in quarter 1 GDP as part of private investment.

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Answer: $222,800

Explanation:

Given that,

Sales = $427,000

Cost of goods sold (all variable) = $173,400

Total variable selling expense = $21,200

Total fixed selling expense = $18,900

Total variable administrative expense = $9,600

Total fixed administrative expense = $36,300

Variable expenses:

= Cost of goods sold + Variable selling expense + Variable administrative expense

= $173,400 + $21,200 + $9,600

= $204,200

Contribution margin = Sales - Variable expenses

                                  = $427,000 - $204,200  

                                 = $222,800

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Answer:

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Answer:

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