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AICPA Exam CPA-Business Topic 3 Question 97 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 97
Topic #: 3
[All CPA-Business Questions]

Long Lake Golf Course has raised green fees to a nine-hole game due to an increase in demand.

Which of the following is correct?

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Suggested Answer: D

Choice 'd' is correct. Inspections. Inspections are part of order costs, not carrying costs.

Choices 'a' and 'c' are incorrect. Inventory carrying costs include all costs associated with warehousing (storing) inventory (e.g., storage, insurance, obsolescence, and spoilage associated with holding inventory).

Choice 'b' is incorrect. The economic cost of holding inventory includes the implicit (opportunity) cost of foregoing a return on the money invested in inventory.


by Marlon at Sep 13, 2024, 02:24 PM

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Abel
3 days ago
That's an interesting point. Maybe the increase in green fees will affect different groups differently.
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Ettie
4 days ago
Hmm, I'm not sure. The question is a bit confusing. Maybe the senior citizens' demand is inelastic, but the weekend demand is elastic? I'll have to think about this one.
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Lucille
5 days ago
I disagree, I believe the demand for senior citizen and weekend games is inelastic.
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Christiane
5 days ago
I think the answer is B. If the demand is inelastic, raising the green fees would not have increased revenue. The fact that they were able to raise the fees suggests the demand is elastic.
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Abel
11 days ago
I think the demand for regular weekday and weekend games is elastic.
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