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 A $ 40 8 C D E 38922 Product 80 40 А 100 20 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? Cost ABCDE 98988 $ 80 $35 70 55 70 28 40 $ 40 100 20 Replacement cost Selling Price $ 60 100 80 130 30 35 70 55 70 28 NRV NRV - NP Market Per Unit Inventory Value
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 A $ 40 8 C D E 38922 Product 80 40 А 100 20 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? Cost ABCDE 98988 $ 80 $35 70 55 70 28 40 $ 40 100 20 Replacement cost Selling Price $ 60 100 80 130 30 35 70 55 70 28 NRV NRV - NP Market Per Unit Inventory Value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
5
Transcribed Image Text: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
$ 40
A
B
80
C
40
D
100
20
Product
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.
A
B
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?
C
D
DE
Cost
$35
70
55
70
28
40
100
$ 40 $
80
20
Replacement
cost
Selling Price
$ 60
100
80
35
70
55
70
28
130
30
NRV
NRV NP
Market
Per Unit
Inventory
Value
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