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The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Cost Per Unit Replacement Product Cost Selling Price $ 55 $ 50 $ 75 95 85 115 C 55 70 95 D 115 85 35 43 145 45 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?

The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Cost Per Unit Replacement Product Cost Selling Price $ 55 $ 50 $ 75 95 85 115 C 55 70 95 D 115 85 35 43 145 45 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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Per Unit Replacement Cost Selling Price $ 75 Cost Product ABCDE $ 55 $ 50 95 85 115 55 70 95 85 43 145 45 115 35 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? Note: Do not round intermediate calculations. Round final answers to 2 decimal places. Product Cost Replacement cost A $ 55 $ 50 B 95 85 C 55 70 D 115 85 E 35 43 NRV NRV minus NP Market Per Unit Inventory Value
Transcribed Image Text:The inventory of Royal Decking consisted of five products. Information about ending inventory is as follows: Per Unit Replacement Cost Selling Price $ 75 Cost Product ABCDE $ 55 $ 50 95 85 115 55 70 95 85 43 145 45 115 35 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? Note: Do not round intermediate calculations. Round final answers to 2 decimal places. Product Cost Replacement cost A $ 55 $ 50 B 95 85 C 55 70 D 115 85 E 35 43 NRV NRV minus NP Market Per Unit Inventory Value
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