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MC35 The December 31, 2019 inventory of Hope Company consisted of NC35 The December 31, 2019 inventory of Hope Company consisted of four products, for which certain information is provided below. Estimated Unit Number disposal cost selling price per unit 6.50 Estimated Normal profit on sales 20% Product Cost of units 1,000 2,000 3,000, 4,000 per unit 40 25 42 12.00 48 25% 120 25.00 3.00 P 190 30% E 18 26 10% Hope Company measures its inventory at the lower of cost and net realizable value on an item-by-item basis. How much is the total inventory value at December 31, 2019? P692,500 P541,000 P529,000 P469,000 а. b. с. d.

MC35 The December 31, 2019 inventory of Hope Company consisted of NC35 The December 31, 2019 inventory of Hope Company consisted of four products, for which certain information is provided below. Estimated Unit Number disposal cost selling price per unit 6.50 Estimated Normal profit on sales 20% Product Cost of units 1,000 2,000 3,000, 4,000 per unit 40 25 42 12.00 48 25% 120 25.00 3.00 P 190 30% E 18 26 10% Hope Company measures its inventory at the lower of cost and net realizable value on an item-by-item basis. How much is the total inventory value at December 31, 2019? P692,500 P541,000 P529,000 P469,000 а. b. с. d.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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MC35 The December 31, 2019 inventory of Hope Company consisted of NC35 The December 31, 2019 inventory of Hope Company consisted of four products, for which certain information is provided below. Estimated Unit Number disposal cost selling price per unit 6.50 Estimated Normal profit on sales 20% Product Cost of units 1,000 2,000 3,000, 4,000 per unit 40 25 42 12.00 48 25% 120 25.00 3.00 P 190 30% E 18 26 10% Hope Company measures its inventory at the lower of cost and net realizable value on an item-by-item basis. How much is the total inventory value at December 31, 2019? P692,500 P541,000 P529,000 P469,000 а. b. с. d.
Transcribed Image Text:MC35 The December 31, 2019 inventory of Hope Company consisted of NC35 The December 31, 2019 inventory of Hope Company consisted of four products, for which certain information is provided below. Estimated Unit Number disposal cost selling price per unit 6.50 Estimated Normal profit on sales 20% Product Cost of units 1,000 2,000 3,000, 4,000 per unit 40 25 42 12.00 48 25% 120 25.00 3.00 P 190 30% E 18 26 10% Hope Company measures its inventory at the lower of cost and net realizable value on an item-by-item basis. How much is the total inventory value at December 31, 2019? P692,500 P541,000 P529,000 P469,000 а. b. с. d.
Expert Solution
Concept

Under Lower of Cost or Net Realizable value method, the value of inventory is calculated following the below mentioned steps:

  • STEP NO. 1: Estimated Net realizable value per unit is calculated for each item separately. Net realizable value is calculated by deducting estimated disposal cost per unit from estimated selling price per unit.
  • STEP NO. 2: Unit cost per unit will be compared with Estimated Net Realizable value per unit and lower of the two will be selected for each product.
  • STEP NO. 3: Lower of Unit cost per unit and Estimated Net Realizable value per unit will then be multiplied with the number of units of that respective item to arrive value of that item.
  • STEP NO. 4: Value of ending inventory will the aggregate of value of individual products calculated in Step No. 3.
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