The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Per Unit Replacement Product Cost Cost Selling Price A $ 40 $ 35 $ 60 B 80 70 100 C 40 55 80 D 100 E 20 70 28 130 30 Selling costs consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. The normal profit is 30% of selling price. Required: What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory? Product Cost Replacement cost A $ 40 $ 35 B 80 70 C 40 55 D 100 70 E 20 28 NRV NRV minus NP Market Per Unit Inventory Value
The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Per Unit Replacement Product Cost Cost Selling Price A $ 40 $ 35 $ 60 B 80 70 100 C 40 55 80 D 100 E 20 70 28 130 30 Selling costs consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. The normal profit is 30% of selling price. Required: What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory? Product Cost Replacement cost A $ 40 $ 35 B 80 70 C 40 55 D 100 70 E 20 28 NRV NRV minus NP Market Per Unit Inventory Value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
Haresh
Transcribed Image Text:The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows:
Per Unit
Replacement
Product
Cost
Cost
Selling
Price
A
$ 40
$ 35
$ 60
B
80
70
100
C
40
55
80
D
100
E
20
70
28
130
30
Selling costs consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. The normal profit is
30% of selling price.
Required:
What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of
ending inventory?
Product
Cost
Replacement
cost
A
$
40 $
35
B
80
70
C
40
55
DE
100
70
20
28
NRV
NRV minus NP
Market
Per Unit
Inventory
Value
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education