Under what circumstances is relative sales value anappropriate basis for determining the price assigned toinventory?

Q: what is the effect of purchase supples on accout on current ratio?

A: Current ratio is the one that shows the current assets as numerator and current liabilities…

Q: Why Sales revenue does not include the residual value?

A: The residual value, also known as salvage value, is the estimated value of a fixed asset at the end…

Q: Why does Sales discounts are variable consideration?

A: Variable considerations: Variable consideration refers to the amount that the corporation is…

Q: What assumption is usually made concerning sales mix inCVP analysis?

A: Sales mix: A proportion of two or more products sold by the company to maximize the profit, that…

Q: Which one of the following sets of inventory cost flow assumptions is not susceptible to profit…

A: FIFO and average cost methods are considered as the sets of inventory cost flow assumptions that are…

Q: How are the floor and ceiling limits calculated as per the lower of cost or market (LCM) method…

A: LCM that is lower of cost or market value method says that inventory should be valued at a price…

Q: Explain the argument for and against the use of net price method with respect to purchase discounts?

A: The Net Price Method (NPM) provides information about the purchase discounts lost by the company and…

Q: What effect do minor deviations from the EOQ have on totalinventory cost?

A: Minor variations from the EOQ will not in general highly affect the total inventory cost except if…

Q: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: How is standalone selling price defined?

A: Performance Obligation: Performance obligation refers to the obligation that the seller to provide…

Q: What is the transaction price? What additional factorsrelated to the transaction price must be…

A: The transaction price is an amount that is received by the company from the transfer of goods or…

Q: Discuss the effect of absorption and marginal costing on inventory valuation and profit…

A: Absorption costing also written as full costing. Under this method, all costs are considered in…

Q: FIFO cost of goods sold?

A: Goods available for sale Cost of goods sold + Ending inventory As per LIFO method,   Cost of…

Q: Explain the (a) lower of cost or net realizable value (LCNRV) approach and the (b) lower of cost or…

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

Q: Distinguish between the sales values at splitoff method and the NRV method.

A: Sales value at split-off method: Sales value at split-off method allocates joint cost to each joint…

Q: In which of the following purchase methods buying goods for taking advantage of favourable market…

A: Speculative purchasing is a method in which goods are purchased by taking advantage of favourable…

Q: Distinguish between the sales value at splitoff method and the NRV method

A: Sales value at split-off method: Sales value at split-off method allocates joint cost to each joint…

Q: What is meant by the term sales mix? What assumption is usually made concerning sales mix in CVP…

A: Sales mix of a product is the proportion of a product sales in overall sales of the company. A…

Q: How can a company track the extent of price discounting on a customer-by-customer basis?

A: Customer Profitability Analysis:Customer profitability analysis is the process of ascertaining the…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: how is the selling price computed

A: Formula: Selling price=Cost100%-Gross profit ratio

Q: Explain how negotiation between the supplying and buying units may be used to set transfer prices.…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: A key factor is one which restricts O The volume of sales The volume of production The volume of…

A: Key factors means those significant factors which can impact a business organisation to a great…

Q: The application of the lower of cost or market rule to inventory valuation is an example of a. the…

A: The valuation of inventory is done at lower of cost or net realisable value as per relevant…

Q: What method of inventory valuation should be used for economic decision-making problems?

A: Inventory valuation is necessary for ascertaining the accurate cost of inventory so that accurate…

Q: What are some inventory ordering costs? As defined here, are thesecosts fixed or variable?

A: Inventory ordering cost can be define as the cost that is incurred by the firm during order…

Q: A cost - based transfer price considers the cost of producing the goods when determining the price.…

A: At the time of determining the prices of the goods, the cost of goods-producing is required to be…

Q: Conceptually, how would you evaluate a quantity discount offerfrom a supplier?

A:

Q: Explain the term sales value at splitoff method.

A: Definition:   Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: How sensitive is the NPV to changes in the quantity sold?

A: Net Present Value (NPV) is a capital budgeting technique which uses a discount rate to bring all the…

Q: When applying lower of cost or net realizable value under the FIFO, average cost, or specific…

A: The lower of cost or net realizable value method says we should record the inventory at market price…

Q: How is the price of an item established in a target pricing contract?

A: Target pricing is the approach which is innovative and used at the initial stage of the new…

Q: Explain the following assertion: “Price setting generally requires a balance between market forces…

A: Businesses have to make a lot of decisions in running a business one of which is price setting. They…

Q: Describe the approaches to estimate stand-alone selling prices.

A:

Q: What is the purpose of the lower of cost or net realizable value rule?

A: lower of cost or net realizable value rule(LCNRV method):Inventory should be valued at the lower of…