Answer: False
Explanation: In simple words, conflict of interest refers to a situation in which any individual or an entity holds the position of authority in which any decision made by him or her can lead to personal benefit at the cost of others loss.
The given statement is false as conflict of interest would only appear when the employees have financial investments in the companies in which they are working as it can lea d to access of materiel non public information or authority to make decisions for personal benefit.
Yes, a conflict of interest can occur when an employee's personal financial investments influence their professional decisions. This is particularly prevalent and complex in roles that deal with financial decisions or politics.
Explanation:True, conflicts of interest may exist when employees have financial investments. A conflict of interest can arise when an employee's personal financial interests conflict with their professional duties. For example, if an employee in a supervisory role at a bank also owns a large amount of shares in the bank, they might face a conflict of interest. The employee might be influenced by their personal financial investments to make decisions that are not in the best interest of the bank. This is especially controversial and problematic when such decisions come under political pressure. Therefore, it's essential that employees and organizations actively manage and disclose such conflicts of interest.
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Although competitors can copy or match the goods and services a firm offers, the firm can still develop a sustainable competitive advantage through ______________ if its products have high perceived value and effective branding or positioning.
Answer: Product excellence
Explanation:
The product excellence is one of the type of product management approach in an organization and it basically producing the efficient goods and the services according to the customer desire and the requirement.
The following are some points that should be remember while creating the product excellence are as follows:
The manufacture should known about the actual requirement of the customer. Creating a efficient design of the product.Always establishing a clear goal regarding the product strategy for producing the goods and the services.Therefore, Product excellence is the correct answer.
Investors Fund, a large financial institution, announces that it will start monitoring its employees’ electronic communications. If Mary, an Investors Fund employee, resists this policy, her best argu-ment is that the monitoring violates
Answer:
Employee Privacy Rights
Explanation:
Some employees are resisting the new policy by the investor's fund to monitor their employee's phone calls. The reason to resist this policy is that it violates employee privacy rights. The company must talk to the employee before initiating the policy to monitor them which might create problems for the company in the future. Every employee has privacy rights, and the company must take it under consideration before designing such policies.
1. The method of deducting the cost of tangible personal and real property over its useful life is . 2. The method of deducting the cost of intangible assets over a specific time is . 3. The method of deducting the cost of natural resources over time is .
Depreciation is the method used to deduct the cost of tangible assets over time. The method used for intangible assets is called Amortization. For natural resources, the method used is Depletion.
Explanation:The method of deducting the cost of tangible personal and real property over its useful life is known as Depreciation. This is a method used by companies to spread the cost of an asset over its useful life to match the expense of the asset with the revenues it generates.
The method of deducting the cost of intangible assets over a specific time is referred to as Amortization. Intangible assets can include patents, copyrights, goodwill, etc. The value of these assets are gradually written off over a period of time through the process of Amortization.
The method of deducting the cost of natural resources over time is known as Depletion. This is a method used mostly by extracting companies, like mining or logging, to account for the reduction of a product's reserves over time.
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Methods of deducting costs over time include depreciation for tangible personal and real property, amortization for intangible assets, and depletion for the cost of natural resources. Each method aligns with the concept of matching expenses with revenue in the period they occur, following the matching principle in accounting.
Explanation:The method of deducting the cost of tangible personal and real property over its useful life is called Depreciation. This allows for the cost of an asset to be spread out over its lifespan. For example, if a business buys a vehicle for $10,000 and expects it to last for 10 years, it could deduct $1,000 from its taxable income each year.
The method of deducting the cost of intangible assets over a specific time is called Amortization. Intangible assets include things like patents, copyrights, and software development costs that provide value over a period of time. An example would be if a company spent $500,000 on a software development project intended to be in use for 5 years, then the company would deduct $100,000 each year.
For natural resources, the method of deducting the cost is through Depletion. This gives companies a way to account for reducing quantities of raw materials like oil, minerals, and timber. Suppose a company owns a timberland valued it at $3M with an estimated total of 1M trees - as they remove trees, they can deduct the cost per tree from their revenues.
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Auditors found that the entity has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the auditors would choose between which reporting options?
a. Unmodified opinion or disclaimer of opinion.
b. Unmodified opinion or qualified opinion.
c. Unmodified opinion with an emphasis-of-matter paragraph or an adverse opinion.
d. Qualified opinion or adverse opinion.
Answer:
d. Qualified opinion or adverse opinion.
Explanation:
A qualified opinion is used in an auditor's report that accompanies this entity audited financial statements. It is an auditor's opinion that suggests this entity has not capitalized a material amount of leases in the financial statements and there is a materiality of departure from the generally accepted accounting principles (GAAP) .
The adverse opinion is when an entity needs to reiterate and complete another audit of its financial statements.
Which of the following is not an assumption of the productions possibilities frontier?
a. A country produces only two goods or types of goods.
b. Technology does not change.
c. The amount of available resources does not change.
d. There is a fixed quantity of money.
Answer: Option D
Explanation: A frontier of development possibilities determines the set of choices made by society for the mixture of goods and services it can create, given the available resources capacity. Usually considered for an economy, this balancing act extends to every ordinary citizen, and the economic institution as well.
This curve depicts the fact that only by reallocating resources from other goods and thus producing less of them can one good be produced as the resources in hand for production is limited.
Hence from the above we can conclude that the correct option is D.
Town Crier has 10 million shares of common stock outstanding. 2 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $28 per share the preferred shares are selling for $15.50 per share, and the bonds are selling for 97 percent of par, what would be the weight used for debt in the computation of Town Crier's WACC? Multiple Choice O
A. 30 percent
B. 312 percent
C. 3.20 percent
D. 3.33 percent
The weight used for debt in Town Crier's WACC is calculated by dividing the total debt by the sum of the market values of common stock, preferred stock, and debt, resulting in about 3.02%, which corresponds to answer C. 3.20 percent.
Explanation:To calculate the weight used for debt in the computation of Town Crier's Weighted Average Cost of Capital (WACC), we need to first understand the market values of equity (both common and preferred) and debt. The company has 10 million common shares outstanding at $28 each, 2 million preferred shares at $15.50 each, and 10 thousand bonds selling for 97% of par. Assuming each bond has a par value of $1,000 (which is typical but not stated in the question), the total market value of each component is as follows:
Common Stock: 10,000,000 shares * $28 per share = $280,000,000Preferred Stock: 2,000,000 shares * $15.50 per share = $31,000,000Bonds: 10,000 bonds * $1,000 par value * 97% = $9,700,000To find the weight of debt in the WACC calculation, we divide the total debt by the sum of the market values of debt and equity:
Weight of Debt = Debt / (Common Stock + Preferred Stock + Debt) = $9,700,000 / ($280,000,000 + $31,000,000 + $9,700,000) = $9,700,000 / $320,700,000 ≈ 0.03023, or 3.02%
So, the correct answer is C. 3.20 percent.
For a firm with an optimal capital structure, the weighted average cost of capital (WACC) is:_________
a) higher than the cost of equity
b) lower than the cost of debt
c) lower than the cost of unlevered equity
d) independent of the capital structure
Answer and Explanation:
c) lower than the cost of unlevered equity
Which of the following statements is TRUE?A)Only Canada can benefit from trade because the United States has an absolute advantage inthe production of both soybeans and alfalfa. B)Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa. C)Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans. D)Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in theproduction of both soybeans and alfalfa
Option C statement is true, Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans.
Explanation:
Global trade in goods has increased rapidly since the Second World War and particularly in the last three decades. Food was no exception, as well as the global food network has become extremely complex and integrated, with over 1.1 trillion dollars in agricultural trading today.
In a peaceful world, a country can make reason to cultivate the few products that it is suitable to manufacture, export what it really is capable of producing to a competitive advantage and import what it should not grow. It is a "comparative advantage" and a key economic theory supporter.
Final answer:
The true statement about trade benefits between the US and Canada is that both countries benefit when each specializes in the production of goods where they have a comparative advantage, with the US in soybeans and Canada in alfalfa.
Explanation:
The correct answer to which statement is true regarding the effects of trade between the United States and Canada in relation to the production of soybeans and alfalfa is B) Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa. This is based on the concept of comparative advantage, which means that even if one country has an absolute advantage in the production of all goods, it can still be beneficial for that country to specialize in goods for which it has the greatest relative efficiency.
Absolute advantage refers to the ability of a country to produce more of a good with fewer resources than another country. However, comparative advantage considers what is given up to produce that good. Even if a country like the United States has an absolute advantage in producing both soybeans and alfalfa, it may benefit from specializing in soybeans, which it produces with a relatively greater efficiency compared to alfalfa, and then trade with Canada, which specializes in alfalfa, to maximize overall efficiency and gains from trade.
Which of the following application models is more likely to be suitable for a large company with a number of existing virtualized datacenters around the world, needing to make an application available to its worldwide members of staff, some of whom are office based while others are mobile workers using a variety of network clients?a. Distributed application with client software installed on each mobile and desktop device.b. Desktop applications installed on all mobile and desktop devices.c. Distributed web application hosted at datacenters, accessed via browsers on each mobile and desktop device.d. Cloud application hosted by cloud provider, accessed via browsers on each mobile and desktop device.
Answer:
c. Distributed web application hosted at datacenters, accessed via browsers on each mobile and desktop device.
Explanation:
Because the organization has an existing and established virtualized data center, it really is highly probable that it will be able to use available resources to implement the application without incurring the extra cost of signing up to a cloud solution or host.
Which type of consumer problem solving is typically used when a consumer already has a large amount of experience in how to meet a specific need and does not require additional information?
A. routinized response behaviorB. unthinking problem solvingC. limited problem solvingD. rational problem solvingE. extensive problem solving
Answer:
Routinized response behavior
Explanation:
The problem solving method used by a consumer who have a large experience on a particular kind of purchase and doesn't require additional information is the routinized problem solving method.
The routinized problem solving method involves consumers buying products that they are already familiar with when making a purchase decision.
Walden Company collects the annual fee for 100 magazine renewals. The annual price is $104 per subscription and covers 52 weekly magazines. The subscription period is from July 1 till June 30 of the following year. During the current calendar year for each subscription, Walden should recognize
Answer:
$5,200
Explanation:
Annual price for each subscription is $104 covering the period from July 1 to June 30 (that is 52 weeks).
Half of this period fall in the current calendar year. i.e. July 1 to December 31 = 26 weeks.
Therefore, the amount to be recognized in the current calendar year is half the total subscription fee.
Total subscription fee = $104 * 100 renewals = $10,400.
There, half of that which will be recognized in the current calendar year
= 50% of $10,400
= $5,200.
The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills. She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually. She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days. Assuming a 30-day month, what is the economic order quantity?
Answer:
3,000 $100 bills equivalent to $300,000
Explanation:
The economic order quantity (EOQ) is the optimum quantity of a good to be purchased or required at a time in order to minimize ordering and carrying costs in inventory.
EOQ = the square root of [(2 times the annual demand in units times the incremental cost to process an order) divided by (the incremental annual cost to carry one unit in inventory)]
annual demand in units = 12,500 x 12 = 150,000incremental costs to process an order = $300incremental annual cost to carry one unit in inventory = 10% x 100 = $10EOQ = √[(2 x 150,000 x $300) / $10] = √($90,000,000 / $10) = √9,000,000 = 3,000 bills
The economic order quantity for ordering 'BIG BUCKS' bills is approximately 2,739 bills.
Explanation:To determine the economic order quantity, we need to use the formula: EOQ = √((2DS)/H), where D represents the annual demand, S represents the cost per order, and H represents the carrying cost per unit. Based on the given information, the annual demand is 12,500 bills, the cost per order is $300, and the carrying cost is 10% of the bill's value per year.
Using the formula, we can calculate the economic order quantity as follows:
EOQ = √((2 * 12,500 * 300)/(0.10 * 100)) = √7,500,000 = 2,738.61
Therefore, the economic order quantity for ordering 'BIG BUCKS' bills is approximately 2,739 bills.
The lack of marketing information about religion is primarily due to ________. Select one:
a. the small number of people who are influenced in the marketplace by religious issues
b. the dollar value of the Christian market being very low
c. traditional bigotry toward religion
d. religion being somewhat of a taboo subject among researchers
Answer:
d.
Explanation:
religion being somewhat of a taboo subject among researchers
Most researchers especially science researchers don't believe there exist any religion. Some of them are free thinker, they believe things just happened through evolution.
Trek Holidays company signed a 7%, 10- year note payable for $166,000. The company paid an instalment of $2,500 for the first month. What portion of the monthly payment is principal? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
a. $1,532
b. $16,333
c. $4,980
d. $4,032
Answer:
a. $1,532
Explanation:
The note payable is 166,000 and 7% so the yearly interest on the note payable is 0.07*166,000=11,620
In order to find the monthly interest rate we will divide 11,620 by 12
11,620/12=968.3
In order to find the monthly principal we will subtract the monthly interest from
the monthly payment of 2,500
2,500-968.3=1,531
We can round that of to 1532 for the answer from the options.
which of the following is a characteristic of changes made in the working environment
1. Transparent & Open Communication
2. Work-Life Balance
3. Training & Development-Focused
4. Recognition for Hard Work
5. Strong Team Spirit
Answer:
Transparent and Open Communication
Explanation:
In an organization whether its a national or multicultural environment, There should be an open and transparent communication from top to bottom and or bottom to top. They must encourage people to communicate openly, sharing their failures versus hiding them or allowing them to fester and also must engender an openness to share ideas and collaborate. It is vital to openly share ideas on all fronts, including on what is working and what is not working, what we know and what we do not know. Knowing what we do not know is significant, and we must let others know this.
Transparent and open communication tends toward the team commitment and build strong team spirit which helps to focus in work life balance too.People get recognition for their initiatives and hard work and get chances to progress more. Hence the open and transparent communication makes employee-employer equity equitable and achieve the organizational goals
The written disclosure document that must be furnished by a solicitor to a client under the Investment Advisors Act of 1940 must include all of the following except
[A] any service that the solicitor will be providing to the client[B] the compensations that the solicitor will receive[C] the name of the broker dealer that will affect the trades[D] the name of the investment advisors that will be providing advisory service
Answer:
C) the name of the broker dealer that will affect the trades
Explanation:
Solicitors must present a separate disclosure that must include the name of the solicitor and the services he/she provides, the name of the investment advisor for whom the solicitor is working, and the nature of the relationship between the solicitor and the investment advisor. The compensation agreement must also be included, along with any amount that the client will be charged in addition to the advisory fee.
What ratio is used to measure the profit earned on each dollar invested in a firm’s stockholders?
a.Current Ratio
b.Asset Turnover Ratio
c.Return on Sales Ratio
d.Return on Equity
Answer:
Correct answer is letter D, Return on equity ratio
Explanation:
Return on equity ratio is used to measure on how well the firm uses the invested dollars to the firm to generate earnings. It is sometimes called as return on net worth. By computing equity ratio, the investors will know how much is the earnings on their per dollar investments for the certain period. This will help the investor to monitor and assess their investment earnings for the period.
Suppose your business has agreed to pay a vendor for his services using a cost-plus-fixed-fee contract. This means _____.
a. the agreement is to pay for all the costs and a percentage of costs as fee
b. the agreement is to reimburse for all the costs plus an incentive fee if the vendor meets the deadline
c. the agreement is to provide a total fixed price for the service
d. the agreement is to reimburse the costs plus a fixed amount as fee
Answer: the agreement is to reimburse the costs plus a fixed amount as fee
Explanation: A cost-plus-fixed-fee contract is an expense-reimbursement agreement which allows for a calculated price to be charged to the contractor at the start of the project.
The fixed price doesn't really differ with real costs, but can be changed as a response to changes in the job under the agreement to be done.
In other words, The cost-plus fixed fee arrangement is a special sort of contract in which the contractor is charged for the usual project costs, plus an extra fixed fee for their work. This enables the contractor to earn a profit on the job and promote allocation efficiency in different industries.
As an IAR, you have gotten to know one of your customers and have prepared a financial/investment plan for her retirement based on her circumstances. You advise her that the plan is flexible and will change as her circumstances change. Among the life events that may require such a change in the plan are of the following EXCEPT:
[A] Marriage
[B] Divorce
[C] Child birth
[D] Moving to a new home
Answer:
D) Moving to a new home
Explanation:
When you move to a new home that usually should not change your investment plans, unless you are purchasing some extremely expensive home that will alter your finances completely.
If you move to another state, you will need to change your legal domicile which might require some changes, but it should not affect your financial position.
But if you get married, have a child or get divorced, then your financial position will change dramatically, since your personal finances are affected by these events.
Employees with _____, in which work output is exchanged back and forth among individuals, should be organized into teams to facilitate coordination in their interwoven relationship.
Answer: Reciprocal Interdependence.
Explanation:
Reciprocal Interdependence is a working situation in which the output of a department of an organization forms the direct input used by another department in the same organization.
In organizations functioning with reciprocal interdependence, the various departments have to form strong interwoven relationship to increase effectiveness and productivity.
For its new Jeep Compass, Daimler Chrysler launched a campaign targeting young, hip consumers. To reach its target, Jeep’s advertising agency used music, talking bobbleheads, and other nontraditional marketing tactics to capture consumers’ interest. The agency devised a host of bobblehead characters that represented the wide variety of potential Compass buyers. Daimler Chrysler was the _____ of the message in this communication process.
Answer:
sender
Explanation:
Based on the information provided it can be said that Daimler Chrysler was the sender of the message in this communication process. This can be said because Daimler was the one who launched the campaign that was used to target these consumers and garner their interest towards the product they are selling.
Daimler Chrysler was the source of the message in its campaign for the Jeep Compass, using innovative marketing tactics to appeal to young consumers and mirroring historical patterns in automobile industry advertising.
In the communication process described, Daimler Chrysler was the source of the message. They crafted a marketing campaign featuring nontraditional tactics such as music and talking bobbleheads to appeal to a younger, more dynamic audience. Their approach highlighted the importance of understanding the target audience's psychographic and lifestyle preferences, allowing them to tailor their message effectively. Daimler Chrysler's use of these approaches builds on a tradition within the automobile advertising industry where companies like Volkswagen and Dodge have similarly used cultural trends and consumer attitudes to shape their branding and advertising strategies.
An investment of $100,000 is worth $105,000 after 3 months. If the investment keeps growing at the current rate, at the end of one year, the annualized rate of return will be:A. 5.00%B. 20.00%C. 21.55%D. 25.00%
Answer:
C 21.55%
Explanation:
The investment grows by 5% in three months and assuming that the investment earns 5% for every three months (every quarter). Therefore every quarter investment earns 5%. The annualized return is calculated as follows:
Annualized return = (1 + periodic return) * (1 + periodic return).... -1 * 100
Annualized return =( 1.05 * 1.05 * 1.05 * 1.05) - 1 * 100
Annualized return = 21.55%
ABC common stock has been moving up recently and one of your clients purchased several hundred share of the stock this morning. Since the investor purchased the stock, the price went up by one point and then returned to the price that the customer paid this morning. The client decides to buy a call option on ABC common stock. The most likely reason for the purchase of the call would be:________.
Answer:
ABC common stock has been moving up recently and one of your clients purchased several hundred share of the stock this morning. Since the investor purchased the stock, the price went up by one point and then returned to the price that the customer paid this morning. The client decides to buy a call option on ABC common stock. The most likely reason for the purchase of the call would be: inflation or hike in price
Explanation:
Rita is doing her family's grocery shopping and purchases ice cream. She's purchased Blue Bell ice cream before and purchases it again. She's not committed to this brand; it's just that she and her family like it. Which type of nominal decision is this?
A. inconsequential decisionB. indifferent decisionC. automatic decisionD. repeat purchase decisionE. secondary decision
Answer: repeat purchase decision
Explanation: In simple words, repeat purchase decision refers to the situation in which a customer prefers a brand due to some other reasons than brand loyalty.
These decisions could be made for a number of reasons like lack of alternatives, better pricing, general behavior or past reference etc.
Generally these decisions are made by the customers casually and the products for which such decisions are made have low prices and do not take mu share in the income of consumers.
Thus, from the above we can conclude that the given case depicts repeat purchase decisions.
There was a tremendous drought in California, where the majority of lettuce is grown for the United States. Lettuce is vitally needed to make delicious tacos for Taco Tuesday. As a result of the drought, the price of lettuce used to produce tacos doubles.People get tired of eating tacos on Tuesday and switch to eating lasagna. What happens to lettuce in the short term?
Answer:
There was a tremendous drought in California, where the majority of lettuce is grown for the United States. Lettuce is vitally needed to make delicious tacos for Taco Tuesday. As a result of the drought, the price of lettuce used to produce tacos doubles.People get tired of eating tacos on Tuesday and switch to eating lasagna. What happens to lettuce in the short term? reduction in demand and supply which affects the price, such inflation of price would reduce the demand
Explanation:
Which of the following statements is true?
a. If a tax is imposed on a product sold by a monopolist, the monopolist will maximize its profits by producing where marginal revenue equals marginal cost.
b. A monopolist will always charge the highest possible price.
c. If a tax is imposed on a product sold by a monopolist, the monopolist can increase its price to pass along the entire tax to consumers.
d. Because a monopolist faces no competition, the demand for its product is perfectly inelastic.
Answer:
Option C is correct
Explanation:
Since it is a specific sales tax, the effect would be shifted to the consumers. The optimal output would be determined by
MR= MC + T =MCT
MR= marginal revenue, MC = marginal cost, T = tax
That mc curve would shift to mct which is the new equilibrium
The following information is available for Chap Company.Sales: 350,000Cost of goods sold: 120,000Total fixed expenses: 60,000Total variable expenses: 100,000Which amount would you find on Chap's CVP income statement?A. Contribution margin of $250,000B. Contribution margin of $190,000C. Gross profit of $230,000D. Gross profit of $190,000
Answer:
A. Contribution margin of $250,000 and C. Gross profit of $230,000.
Explanation:
Sales = $350,000
Cost of goods sold = $120,000
Total fixed expenses = $60,000
Total variable expenses = $100,000
Therefore,
Gross profit = Sales - Cost of goods sold
= $350,000 - $120,000
= $230,000
Contribution margin = Sales - Total variable cost
= $350,000 - $100,000
= $250,000
The right options are A. Contribution margin of $250,000 and C. Gross profit of $230,000.
_________ values in economics are those that have been adjusted to remove the impact of inflation so that meaningful comparisons can be made..
Answer:
Real values are those that have been adjusted to remove impact of inflation.
Explanation:
Real values are the value of goods and services produced / consumed in a period which are adjusted for inflation.
Real values are very useful figures as these are required to calculate growth in Gross Domestic Product (GDP), personal incomes etc.
Real value is obtained by removing removing impact of increase in price level over the period by adjusting with deflator as defined in below example.
Example
Value of goods and services produced in an economy 2019 USD 100 billion
Value of goods and services produced in an economy 2018 USD 80 billion
Inflation in 2019: 5%
So the real growth in GDP: {(100 - 80) / 80} - 5% = 20%.
The Keynesian Theory "Bathtub" is illustrated below. Decreasing flows in one or more of the spending variables (C, I, G or NX) will, ceteris paribus, __________ the income, employment, and output (water level in the tub).a. increaseb. decreasec. maintaind. none of the above
Answer:
B) decrease
Explanation:
The Keynesian Bathtub Theory is an analogy between the economy and a bathtub where increases in government spending, consumption, business investments and exports, are shown as water flows into the bathtub. Decreasing spending will decrease the inflow of water into the bathtub which will result in lower income and employment.
Smith Company's inventory cost is $100. The expected sales price is $110, estimated selling costs are $6. The normal gross profit ratio is 20% of selling price. The replacement cost of the inventory is $106. Smith Company uses the LIFO inventory method so must use the lower of cost or market approach and this inventory item should be valued at
A. $102
B. $106
C. $104
D. $110
Using the Lower of Cost or Market (LCM) approach, Smith Company's inventory should be valued at $104, as this is the smaller value between the replacement cost and the market price.
Option C is correct
Explanation:The lower of cost or market (LCM) approach indicates that inventory should be valued at the lesser of the cost to replace the inventory or the market value. In the case of Smith Company, the cost of the inventory is $100, and the replacement cost is $106.
However, the market price (the expected sales price less the selling costs: $110 - $6 = $104) is lower than the replacement cost. Therefore, following the LCM approach, the inventory should be valued at $104.
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