Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50. Under the lower of cost or market rule, Moore's December 31, 2019, inventory of Product A should be valued at a unit cost of: a.$9.50 b.$6.50 c.$7.00 d.$9.00
Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50. Under the lower of cost or market rule, Moore's December 31, 2019, inventory of Product A should be valued at a unit cost of: a.$9.50 b.$6.50 c.$7.00 d.$9.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lower of Cost or Market
Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50.
Under the lower of cost or market rule, Moore's December 31, 2019, inventory of Product A should be valued at a unit cost of:
a.$9.50
b.$6.50
c.$7.00
d.$9.00
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