I know that the number of days sales In inventory is the average inventory divided by the avg daily cost of merchandise sold. You compute the average inventory by dividing the sum of the end of the year and the beginning of the year divided by two. In order to find the daily cost of merchandise sold you must take the cost of the merchandise and divide that by 365. As for the inventory turnover you calculate that by the cost of merchandise sold by the average inventory. Maybe I just cant grasp the exhibit because I know how to calculate it all I just don't u
I know that the number of days sales In inventory is the average inventory divided by the avg daily cost of merchandise sold. You compute the average inventory by dividing the sum of the end of the year and the beginning of the year divided by two. In order to find the daily cost of merchandise sold you must take the cost of the merchandise and divide that by 365. As for the inventory turnover you calculate that by the cost of merchandise sold by the average inventory. Maybe I just cant grasp the exhibit because I know how to calculate it all I just don't u
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
I don't understand exactly what they're asking. I know that the number of days sales In inventory is the average inventory divided by the avg daily cost of merchandise sold. You compute the average inventory by dividing the sum of the end of the year and the beginning of the year divided by two. In order to find the daily cost of merchandise sold you must take the cost of the merchandise and divide that by 365. As for the inventory turnover you calculate that by the cost of merchandise sold by the average inventory. Maybe I just cant grasp the exhibit because I know how to calculate it all I just don't understand it.
![Lower-of-Cost-or-Market Method
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each
inventory item, as shown in Exhibit 10.
Market Value per Unit
Item Inventory Quantity
Cost per Unit (Net Realizable Value)
JFW1
83
$55
$60
SAW9
176
27
23](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c66bc3d-1300-4141-a83b-0a5983915c45%2F27980518-9d71-4f28-9e98-0dac96f63102%2Ff0254le_processed.png&w=3840&q=75)
Transcribed Image Text:Lower-of-Cost-or-Market Method
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each
inventory item, as shown in Exhibit 10.
Market Value per Unit
Item Inventory Quantity
Cost per Unit (Net Realizable Value)
JFW1
83
$55
$60
SAW9
176
27
23
![Exhibit 10
Determining Inventory at Lower of Cost or Market (LCM)
Market Value
Lower of
per Unit
(Net Realizable Value)
Inventory Cost per
Cost or Market
Item
Quantity
Unit
Cost
Market
(LCM)
$ 3,800
2,892
Echo
400
$10.25
$ 9.50
$ 4,100
$ 3,800
(1)
Applied
Individual Item
Foxtrot
120
22.50
24.10
2,700
2,700
Sierra
600
8.00
7.75
4,800
4,650
4,650
Tango
280
14.00
14.75
3,920
4,130
3,920
$15,070
by Item
Total
$15,520 $15,472
Class 1:
$ 9.50
$ 3,800
$ 4,100
2,700
$ 6,800
Echo
400
$10.25
Foxtrot
120
22.50
24.10
2,892
Subtotal
$ 6,692
$ 6,692
(2)
Applied Class
by Class
Class 2:
Sierra
600
8.00
7.75
$ 4,800
$ 4,650
Tango
280
14.00
14.75
3,920
$ 8,720
$15,520
4,130
$ 8,780
$15,472
Subtotal
8,720
$15,412
Total
$ 3,800
2,892
$ 9.50
$ 4,100
2,700
Echo
400
$10.25
(3)
Appled in
Total
Foxtrot
120
22.50
24.10
Sierra
600
8.00
7.75
4,800
4,650
Tango
Total
4,130
$15,472
280
14.00
14.75
3,920
$15,520
$15,472](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c66bc3d-1300-4141-a83b-0a5983915c45%2F27980518-9d71-4f28-9e98-0dac96f63102%2F1f3rsex_processed.png&w=3840&q=75)
Transcribed Image Text:Exhibit 10
Determining Inventory at Lower of Cost or Market (LCM)
Market Value
Lower of
per Unit
(Net Realizable Value)
Inventory Cost per
Cost or Market
Item
Quantity
Unit
Cost
Market
(LCM)
$ 3,800
2,892
Echo
400
$10.25
$ 9.50
$ 4,100
$ 3,800
(1)
Applied
Individual Item
Foxtrot
120
22.50
24.10
2,700
2,700
Sierra
600
8.00
7.75
4,800
4,650
4,650
Tango
280
14.00
14.75
3,920
4,130
3,920
$15,070
by Item
Total
$15,520 $15,472
Class 1:
$ 9.50
$ 3,800
$ 4,100
2,700
$ 6,800
Echo
400
$10.25
Foxtrot
120
22.50
24.10
2,892
Subtotal
$ 6,692
$ 6,692
(2)
Applied Class
by Class
Class 2:
Sierra
600
8.00
7.75
$ 4,800
$ 4,650
Tango
280
14.00
14.75
3,920
$ 8,720
$15,520
4,130
$ 8,780
$15,472
Subtotal
8,720
$15,412
Total
$ 3,800
2,892
$ 9.50
$ 4,100
2,700
Echo
400
$10.25
(3)
Appled in
Total
Foxtrot
120
22.50
24.10
Sierra
600
8.00
7.75
4,800
4,650
Tango
Total
4,130
$15,472
280
14.00
14.75
3,920
$15,520
$15,472
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