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 3Cost$20 $90 $50 Replacement cost 18 85 40 Selling price 40 120 70 Selling costs 6 40 10 Normal profit margin 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? ProductCost Replacement costNRVNRV - NPPer UnitMarket InventoryValue123

Step 1:The per-unit inventory value using lower of cost or market (LCM) is calculated as follows:…

Answered: Product Cost Replacement cost NRV NRV -…

Business

Accounting

Product Cost Replacement cost NRV NRV - NP Per Unit Market Inventory Value 1 2 3

Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter5: Operating Activities: Purchases And Cash Payments

Section: Chapter Questions

Problem 2.7C

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Question

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 margin		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
Per Unit
Market Inventory
Value
1
2
3

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