LF Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011.By 12\31\10, the price per pound of the spice mixture had dropped to $4.60 per pound.In 2010, LF should recognize

Question

Quizplus · Accepted Answer

LF Corporation should recognize a loss of $400 because the price of the spice mixture decreased from $5.00 to $4.60 per pound, resulting in a loss of $0.40 per pound for the 1,000 pounds contracted.

LF Corporation, a Manufacturer of Mexican Foods, Contracted in 2010