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Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:     Product 1   Product 2   Product 3 Cost $ 20     $ 90     $ 50   Replacement cost   18       85       40   Selling price   40       120       70   Selling costs   6       40       10   Normal profit   5       30       12     Required: What unit values should Herman use for each of its products when applying the lower of cost or market (LCM) rule to ending inventory? Product Cost Replacement cost NRV NRV - NP Market Per Unit Inventory Value 1 $20 $18         2 90 85         3 50 40

Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:     Product 1   Product 2   Product 3 Cost $ 20     $ 90     $ 50   Replacement cost   18       85       40   Selling price   40       120       70   Selling costs   6       40       10   Normal profit   5       30       12     Required: What unit values should Herman use for each of its products when applying the lower of cost or market (LCM) rule to ending inventory? Product Cost Replacement cost NRV NRV - NP Market Per Unit Inventory Value 1 $20 $18         2 90 85         3 50 40

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows:
 

  Product 1   Product 2   Product 3
Cost $ 20     $ 90     $ 50  
Replacement cost   18       85       40  
Selling price   40       120       70  
Selling costs   6       40       10  
Normal profit   5       30       12  
 


Required:
What unit values should Herman use for each of its products when applying the lower of cost or market (LCM) rule to ending inventory?

Product Cost Replacement cost NRV NRV - NP Market Per Unit Inventory Value
1 $20 $18        
2 90 85        
3 50 40        
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