Music, Inc. had the following beginning and ending values in its three inventory accounts:     Jan 1, 2021   Dec. 31, 2021 Raw Materials Inventory $500   $800 Work-in-Progress Inventory $1,200   $1,300 Finished Goods Inventory $600   $750   Additional information for the year ending December 31, 2021:   Manufacturing costs: $2,875   Sales revenue: $15,900 Selling & Admin expenses: $3,600 Interest expense: $160 Income tax rate: 20%   What is Music, Inc.’s 2021 Gross Margin (also referred to as Profit Margin)?   Question 9 options:   $13,175   $12,175   $13,275   $12,275

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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.