LF Corporation, a manufacturer of Mexican foods, contracted in 2014 to purchase 1,500 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2015. By 12/31/14, the price per pound of the spice mixture had dropped to $4.70 per pound. In 2014, LF should recognizea a loss of $7,500.

Question

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The loss is calculated as the difference in price per pound ($5.00 - $4.70 = $0.30) multiplied by the quantity (1,500 pounds), resulting in a loss of $450.

LF Corporation, a Manufacturer of Mexican Foods, Contracted in 2014