Final answer:
The relative sales value method is applied when purchasing a group of varying units to allocate costs among the items based on their individual values. It is commonly used for asset bundles .
Step-by-step explanation:
The relative sales value method is used in situation C) When purchasing a group of varying units. It is a technique applied when a company acquires a group of different items at a single combined price.
The relative sales value method is used to allocate the total cost among the various assets based on their individual sales values. The method is often leveraged in situations such as purchasing bundles of assets or batches of inventory where items have different values.
Self-Check Question 1:
- a. Buying apples at a roadside stand: The degree of imperfect information would likely be relatively low because you can physically examine the apples.
- b. Buying dinner at the neighborhood restaurant around the corner: The degree of imperfect information would generally be low, assuming familiarity with the restaurant.
- c. Buying a used laptop computer at a garage sale: The degree of imperfect information would be relatively high due to potential unknowns about the laptop's condition and history.
- d. Ordering flowers over the internet for your friend in a different city: The degree of imperfect information could be relatively high as you cannot see the actual flowers being sent.