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 | 54 | 49 |
65.6 {74-(74×15%)-(54×5%)} |
39.7 {65.6-(75×35%)} |
49 | 49 |
B | 94 | 84 |
101.6 {114-(114×15%)-(94×5%)} |
61.7 {101.6-(114×35%)} |
84 | 84 |
C | 54 | 69 |
82.6 {94-(94×15%)-(54×5%)} |
49.7 {82.6-(94×35%)} |
69 | 54 |
D | 114 | 84 |
128.1 {144-(144×15%)-(114×5%)} |
88.2 {128.1-(114×35%)} |
88.2 | 88.2 |
E |
34 |
42 |
39.1 {44-(44×15%)-(34×5%)} |
23.7 {39.1-(44×35%)} |
39.1 | 34 |
NRV = selling price- selling cost
NRV- NP = NRV - 35%of selling price
Market = middle of replacement cost ,NRV,NRV-NP
Per unit inventory value = lower of cost or market.
Conventional retail method
Cost | Retail | |
Beginning inventory | 14,000 | 22,000 |
Plus: purchases | 104,600 | 167,000 |
Freight in | 8,600 | |
Less: purchase returns | (5,000) | (8,000) |
Plus: net markups | 7,000 | |
Cost to retail percentage 122,000÷188,000= 65% | ||
Less: net markdowns | (4,000) | |
Goods available for sale | 122,000 | 184,000 |
Less: Normal spoilage | (4,400) | |
Net sales | (154,000) | |
Estimated ending inventory at retail | 25,600 | |
Estimated Ending inventory at cost (25,600×65%) | (16,640) | |
Estimated cost of goods sold | 105,560 |
____×____
Any doubt please comment
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Selling Price $ 74 Replacement Cost 49 Product Cost $54 A 94 84 114 C 54 69 94 114 84 144 E 34 42 44 Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal profit is 35% of selling price. Required: What unit value should...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Product Cost $ 59 Per Unit Replacement Cost $ 54 Selling Price $ 79 119 99 89 поопP 99 59 119 39 74 89 47 149 49 Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal profit is 25% of selling price. Required: What unit value should...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Product Cost $ 48 88 Per Unit Replacement Cost $ 43 78 63 Selling Price $ 68 108 48 88 Uw 108 28 138 38 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 40% of selling price. Required: What unit value should Royal Decking...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Product Cost $ 55 Per Unit Replacement Cost $ 50 Selling Price $ 75 115 95 ROA 85 95 55 115 35 70 85 145 45 43 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...
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 $ 50 $ 45 $ 70 90 80 110 65 90 110 140 30 38 40 50 Selling costs consist of a sales commission equal to 15% 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...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Product 1.5 points Cost $ 42 Per Unit Replacement Cost $ 37 82 Selling Price $ 62 102 82 132 Uow 42 102 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 20% of selling price. Required: What unit value should Royal Decking use for...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Selling Price $190 $210 230 250 170 230 150 240 E 100 130 Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 10% of cost. Required: What unit value should Royal Decking use for each of its products when applying the lower of cost or net realizable...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Selling Price A $ 90 $ 110 B 130 150 C 90 130 D 55 85 E 20 30 Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 10% of cost. Required: What unit value should Royal Decking use for each of its products when applying the...
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Selling Price A $ 200 $ 220 B 240 260 C 120 240 D 160 300 E 100 140 Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. Required: What unit value should Royal Decking use for each of its products when applying the...
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 $ 48 $ 43 $ 68 B 88 78 108 C 48 63 88 D 108 78 138 E 28 36 38 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 40% of selling price. Required:...