The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Replacement Cost Selling Price A $40 35 60 B 80 70 100 C 40 55 80 D 100 70 130 E 20 28 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 NRV NRV - NP Market Per Unit Inventory Value A $40 $35 B 80 70 C 40 55 D 100 70 E 20 28
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Replacement Cost Selling Price A $40 35 60 B 80 70 100 C 40 55 80 D 100 70 130 E 20 28 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 NRV NRV - NP Market Per Unit Inventory Value A $40 $35 B 80 70 C 40 55 D 100 70 E 20 28
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows:
| Per Unit | |||
| Product | Cost | Replacement Cost | Selling Price |
| A | $40 | 35 | 60 |
| B | 80 | 70 | 100 |
| C | 40 | 55 | 80 |
| D | 100 | 70 | 130 |
| E | 20 | 28 | 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?
|
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