Question:Given the historical cost of the product, Dominoe is $65, the selling price of product Dominoe is$90, costs to sell product Dominoe are $16, the replacement cost for product Dominoe is $60,and the normal profit margin is 20% of sales price, what is the amount that should be used tovalue the inventory under the lower-of-cost-or-market method?a. $65.b. $56.c. $60.d. $74.

Lower Cost or Market Method:It lets the company record the losses by writing down the worth of…

Answered: Question: Given the historical cost of…

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 7DQ: Using the following data, how should the inventory be valued under lower of cost or market? Original...

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Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of 300, a normal profit margin of 35, and a current replacement cost of 250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Blacks ending inventory.
Sienna Company uses the FIFO cost flow assumption. Sierra has inventory with a selling price of 100, packaging costs of 5, and transportation costs of 10. Siennas normal profit margin is 20. However, due to limited supply of the product from the manufacturer, it would cost Sienna 80 to replace the inventory. What amount should be used as the market value? a. 65 b. 80 c. 85 d. 100
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Question:28 Given the historical cost of the product, Dominoe is $65, the selling price of product Dominoe is $90, costs to sell product Dominoe are $16, the replacement cost for product Dominoe is $60, and the normal profit margin is 20% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method? a. $65. b. $56. c. $60. d. $74.
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What amount per unit should this inventory item be reported
The Company uses lower-of-cost-or-market approach. The replacement cost of an inventory item is $75. Net realizable value is $82.50. Net realizable value less a normal profit margin is $69. The cost of the item is $76.50. The inventory item would be valued at:
Determine the proper unit inventory price in the following independent cases by applying the lower of cost or market rule. Case 1 Case 2 Case 3 Case 4 Case 5 Cost $7.80 $10.50 $11.80 $6.00 $7.20 Net realizable value 8.85 10 12.2 4.25 6.9 Net realizable value less normal profit 8.15 9 11.4 3.75 6.5 Market replacement cost 7.9 10.1 12.5 4 5.4 Instructions : Calculate the LCM for Product 1,2,3,4, and 5.
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If the cost of an item of inventory is $52.00 and the current replacement cost is $70.00, what is the amount included in inventory according to the lower of cost or market? Select the correct answer. A. $18.00 B. $122.00 C. $52.00 D. $70.00

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