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 | $ | 60 | $ | 55 | $ | 80 | ||||||
B | 100 | 90 | 120 | |||||||||
C | 60 | 75 | 100 | |||||||||
D | 120 | 90 | 150 | |||||||||
E | 40 | 48 | 50 | |||||||||
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 each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory? (Do not round intermediate calculations. Round final answers to 2 decimal places.)
Product | Cost | Replacement Cost | Selling Price | Sales Commission | Shipping Costs | NRV | Normal Profit | NRV -NP | Market | Per Unit Inventory Value |
A | $ 60.00 | $ 55.00 | $ 80.00 | $ 8.00 | $ 3.00 | $ 69.00 | $ 16.00 | $ 53.00 | $ 55.00 | $ 55.00 |
B | $ 100.00 | $ 90.00 | $ 120.00 | $ 12.00 | $ 5.00 | $ 103.00 | $ 24.00 | $ 79.00 | $ 90.00 | $ 90.00 |
C | $ 60.00 | $ 75.00 | $ 100.00 | $ 10.00 | $ 3.00 | $ 87.00 | $ 20.00 | $ 67.00 | $ 75.00 | $ 60.00 |
D | $ 120.00 | $ 90.00 | $ 150.00 | $ 15.00 | $ 6.00 | $ 129.00 | $ 30.00 | $ 99.00 | $ 99.00 | $ 99.00 |
E | $ 40.00 | $ 48.00 | $ 50.00 | $ 5.00 | $ 2.00 | $ 43.00 | $ 10.00 | $ 33.00 | $ 43.00 | $ 40.00 |
Notes:
1. Under U.S. GAAP, the term market, as defined in ASC 330-10-20, states that "market" generally means current replacement cost, except that this replacement cost should not (1) exceed net realizable value or (2) be lower than net realizable value less a normal profit margin. |
The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows:
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