Question

J1,200 350,000 385,000 Caiculate Wooden's profit margin ratio for each of the three years. 37. During physical stock take in one of its sports shops, Severino recorded the following: Product Helmets Units Cost per unit $23 $18 $36 $ 7 $27 Using the lower of cost or market value for ending inventory applied individually, calculate any shrinkage. 15 11 20 Market value per unit $21 $16 Bats Shoes Balls Uniforms $33 $ 8 $28 40 28 A Total Book cost В С Total Market Cost Total Market Cost (Collectively) 15x$21 315 11x$16 176 20x$33= 660 40x$ 8=320 28x$28 = 784 2,255 (Individually) $315 15x$25 375 11x$18= 198 20x$36=720 40x$ 7= 280 28x$27 =756 Totals 2.329 Collectively 176 660 280 756 2.187 A - C= $142 A-B $74; Individually

Answer 1

Inventory is valued at lower of cost or market value and any difference is charged to cost of goods sold. In the given case we need to calculate lower of cost or market value individually (i.e. for each product we need to compare cost and market value). (Amounts in $)

Product	Units (A)	Cost per unit (B)	Total Cost (C = A*B)	Market value per unit (D)	Total Market value (E = A*D)	Lower of Cost or Market Value (Lower of C or E)
Helmets	15	$25	375	$21	315	315
Bats	11	$18	198	$16	176	176
Shoes	20	$36	720	$33	660	660
Balls	40	$7	280	$8	320	280
Uniforms	28	$27	756	$28	784	756
Total			2,329		2,255	2,187

Therefore value in inventory for Helmets, bats and shoes has decrease to 315, 176 and 660 respectively.

Total Shrinkage in inventory individually = $2,329 - $2,187 = $142