Question

Skysong, Inc. sells coffee beans, which are sensitive to price fluctuations


1. Skysong, Inc. sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2022 

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Calculate Skysong's inventory by applying the lower-of-cost-or-market basis. 

Skysong's inventory $ _______ 


2. Crane Company sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2022.

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Calculate Crane's inventory by applying the lower-of-cost-or-market basis. 

Crane's inventory $_______ 

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Answer #1

1) Lower of cost or market value

Unit Cost NRV Total Value
Coffea arabica 5.50 5.45 5.45*13700 = 74665
Coffea robusta 3.30 3.40 3.30*5600 = 18480
Total 93145

Inventory value = $93145

2) Lower of cost or market value

Unit Cost NRV Total Value
Coffea arabica 6.10 6.05 6.05*11700 = 70785
Coffea robusta 3.20 3.30 3.20*4500 = 14400
Total 85185

Inventory value = $85185

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