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The Inventory of Royal Decklng consisted of five products. Information about the December 312 lows Per Unit Product Cost Replacement Cost Selling Price. $ 45 78 80 118 50 65 98 148 38 48 Selling costs cons/st of a sales commission equaf to 15% of selling price and shipping costs equal to 5% of cost The normal profit is 30% of selling price. Required: What urilt value should Royal Decking use for each of Its products when apolying the lowerlof cost or market (LCM) rule to units of ending inventory? (Do not round Intermediete calculatIons. Round finat answers to 2 decimal places.) Replacement cost Macket Product Cost NRV NRV NP iventary 60 45 90 80 50 85 80 30 38

The Inventory of Royal Decklng consisted of five products. Information about the December 312 lows Per Unit Product Cost Replacement Cost Selling Price. $ 45 78 80 118 50 65 98 148 38 48 Selling costs cons/st of a sales commission equaf to 15% of selling price and shipping costs equal to 5% of cost The normal profit is 30% of selling price. Required: What urilt value should Royal Decking use for each of Its products when apolying the lowerlof cost or market (LCM) rule to units of ending inventory? (Do not round Intermediete calculatIons. Round finat answers to 2 decimal places.) Replacement cost Macket Product Cost NRV NRV NP iventary 60 45 90 80 50 85 80 30 38

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 the December 31, 2021, inventory is as follows: --- ### Inventory Details (Per Unit) | Product | Cost | Replacement Cost | Selling Price | |---------|------|------------------|---------------| | A | $50 | $45 | $70 | | B | $90 | $80 | $110 | | C | $50 | $65 | $90 | | D | $110 | $86 | $140 | | E | $30 | $38 | $40 | --- ### Additional Information: - **Selling Costs:** There is a sales commission equal to 15% of the selling price and shipping costs equivalent to 5% of the cost. - **Normal Profit:** This equals 30% of the selling price. ### Required: Calculate the unit value Royal Decking should 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 two decimal places. --- ### Calculation Table | Product | Cost | Replacement Cost | NRV | NRV - NP | Market | Per Unit Inventory Value | |---------|------|------------------|------|----------|--------|--------------------------| | A | $50 | $45 | | | | | | B | $90 | $80 | | | | | | C | $50 | $65 | | | | | | D | $110 | $86 | | | | | | E | $30 | $38 | | | | | In this table, "NRV" stands for Net Realizable Value, and "NP" stands for Normal Profit. Calculating these values involves subtracting sales commissions, shipping costs, and normal profit from the selling price to find the market value for comparison with cost.
Transcribed Image Text:The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: --- ### Inventory Details (Per Unit) | Product | Cost | Replacement Cost | Selling Price | |---------|------|------------------|---------------| | A | $50 | $45 | $70 | | B | $90 | $80 | $110 | | C | $50 | $65 | $90 | | D | $110 | $86 | $140 | | E | $30 | $38 | $40 | --- ### Additional Information: - **Selling Costs:** There is a sales commission equal to 15% of the selling price and shipping costs equivalent to 5% of the cost. - **Normal Profit:** This equals 30% of the selling price. ### Required: Calculate the unit value Royal Decking should 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 two decimal places. --- ### Calculation Table | Product | Cost | Replacement Cost | NRV | NRV - NP | Market | Per Unit Inventory Value | |---------|------|------------------|------|----------|--------|--------------------------| | A | $50 | $45 | | | | | | B | $90 | $80 | | | | | | C | $50 | $65 | | | | | | D | $110 | $86 | | | | | | E | $30 | $38 | | | | | In this table, "NRV" stands for Net Realizable Value, and "NP" stands for Normal Profit. Calculating these values involves subtracting sales commissions, shipping costs, and normal profit from the selling price to find the market value for comparison with cost.
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