4- Last year, the company Gama sold 120,000 units of a product whose contribution margin is R$10.00. This year the company expects to sell only 90,000, despite reducing the unit price by R$2.00 and keeping all other costs constant. The expected decrease in operating profit is: (0.6) *

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A:

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.