Describe and apply the lower-of-cost-or-market rule.

Q: Describe and apply the lower-of-cost-or-net realizable value rule.

A:

Q: What is meant by the phrase “different costs for different purposes”?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Give some examples of Fixed Costs?

A: Fixed costs: Fixed costs are those costs which remain unchanged even there is a change in the…

Q: Distinguish between escapable and inescapable costs. Give an example of each.

A:

Q: Explain the difference between price-takers and price-setters.

A: When a company cannot dictate prices then it is known as price taker. On the contrary, when a…

Q: What is lower of cost/market, and why is it used? Provide an example.

A: Inventory is a term which depicts the amount of finished goods prevailing in the business. The…

Q: Does the concept of the relevant range apply to fixed costs? Explain.

A: Fixed Cost: It is a cost which is constant in the short run, it is not related to any change in the…

Q: What is Principle of Unequal Cost and who advocated the principle?

A: The basic principle of unequal cost can be described simply as "buying cheap and selling dear". In…

Q: Costs that will differ between alternatives and influence the outcome of a decision are

A: Cost:   Cost can be defined as the cash and cash equivalent which is incurred against the products…

Q: Describe the uses of cost-plus pricing.

A: Cost plus pricing involves adding a markup to the cost of goods and services to arrive at a selling…

Q: What are the advantages and disadvantages of cost principle

A: Cost principle is an accounting principle that recognizes the asset at their respective cash amounts…

Q: Explain the difference between market-based transfer prices and cost-based transfer prices.

A: Market based Transfer Price and Cost Based Transfer Price: Transfer pricing refers to the rules and…

Q: Understand and apply the lower-of-cost-or-net realizable value rule.

A:

Q: What is a fixed cost? Give an example.

A: Fixed Cost: Fixed costs are those costs which remain unchanged even there is a change in the…

Q: What is the cost principle?

A: Cost Principle:Cost principle requires recording of assets and liabilities on the balance sheet of…

Q: lower-of-cost-or-market approach,

A: It is pertinent to note that inventory need to be valued at cost of net realizable value whichever…

Q: Determining the best approach to pricing requires a cost-benefit trade-off. Explain.

A: The best approach to pricing requires the cost benefit trade-off is explained as below, The Best…

Q: Giving examples, distinguish between Prime costs and Marginal costs

A: Prime costs are the firm total expenses directly related to the materials and labour used in…

Q: What are the various levels of aggregation to which the lower of cost and net realizable value rule…

A: LCNRV (Lower of Cost or Net Realizable Value) approach: It is an approach that compares the cost of…

Q: What does the lower-of-cost-or-market (LCM) rule require?

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

Q: The lower-of-cost-or-market rule can be applied to which of the following?

A: The lower of cost or market rule can be applied on the following: 1. Major classes or categories of…

Q: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: which of the following could affect the price

A: Stocks are prone to systematic and unsystematic risks. Factors or risk that affect the entire…

Q: Why there is a need to identify the standard co

A: Standard Cost A standard cost is an estimated expense that normally occurs during the production of…

Q: What is a standard cost? Explain? Give an example?

A: Standard Cost: Standard cost is the benchmark amount of per unit product, per unit input or per unit…

Q: What are the advantages and disadvantages of target pricing versus cost-based pricing?

A: Advantages of target pricing are as follows: It help in controlling in cost It provide profit with…

Q: What two assumptions are frequently made when estimating a cost function?

A: Cost Function:Cost function represents the basic change that occurs in the total cost due to the…

Q: In order to analyze the c-v-p relationship , what types of costs should be classified ? Why?

A: C-V-P relationship means the cost volume and profit relationship. This is usually done to recognize…

Q: Explain why unit costs must often be interpreted with caution?

A: Unit cost: Unit cost refers to the average cost per unit which is computed when the total cost of…

Q: Describe how changes in the demand, ordering cost,or holding cost affect the EOQ.

A: Conceptual base- Economic Order Quantity (EOQ) is the order quantity that minimizes total inventory…

Q: Understand and apply the lower-of-cost-or-market rule.

A: Cost: It is the economic value incurred by an organization to produce a product or render a service.

Q: What is cost approach measurement?

A: A process that involves finding out the economic value or the fair value of a business entity refers…

Q: example of lower of cost or net realizable value and explain

A: The concept of lower of cost or net realizable value says that the amount of inventory should be…

Q: Y,a,b and X explain these with help of examples according to cost behaviour

A: Cost behavior analysis helps to understand the change in the total cost with respect to the change…

Q: Explain cost constraint and materiality constraint by giving your own examples.

A: Accounting constraints under the accounting field are boundaries or guidelines which are followed…

Q: What is a mixed cost? Give an example.

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: When is it more appropriate to use market-based transfer price rather than cost-based transfer…

A: Transfer pricing:- Its the price at which one unit of a company sells goods to its another unit.…

Q: lower-of-cost-or-market

A: Under lower of cost or market value rule, inventory is valued at cost or market value whichever is…

Q: Which of the following is the best definition of a variable cost?

A: Types of Costs 1. Variable Cost: The cost which changes with the change in the level of activity is…

Q: Which one of the following may not be considered a cost driver?

A: Under activity based costing, activities and cost allocation basis (cost drivers) are used to…

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.