Question

Part Four: Problem (15 points) HCH Corporation sells copying machines and replacement toners. HCH Corporation sells two models - Model A and Model B. HCH Corporation provided the following information regarding inventory at the end of the current year. Item Cost Number of Units Replacement Selling Cost Price Cost of Completion and Disposal Normal Profit 2,000 1.500 $155 $210 40 55 $20 $35 S170 1 0 1648 Model A Copying Machine Replacement Toner Model B Copying Machine Replacement Toner 3,400 2,750 215 65 235 145 25 15 2 0 25 185 55 Instructions: A. Calculate the ceiling and floor for each model for the lower of cost or market rule. Item Ceiling Floor Model A Copying Machine Replacement Toner Model B Copying Machine Replacement Toner B. HCH Corporation is pricing its ending inventory using the lower of cost or market but want to know the difference with the standard of lower of cost or net realizable value. Fill the following table with the unit values that HCH Corporation should use for each model under each rule. Inventory at lower of cost or market Inventory at lower of cost or net realizable value Item Model A Copying Machine Replacement Toner Model B Copying Machine Replacement Toner

Answer 1

Answer:

As per the given Question

Cost of NRV (Ceiling) NRV less profit Selling price-Cost of margin completion and Normal Repacement completion and Floor)-NRV- disposal profit cost disposal Normal profit Lower Lower of of cost Cost or MV Cost or MV NRV Inventory at lower of cost inventory at lower of No. of or market = Lower of cost cost or NRV = Lower of Units or MV X Quantity cost or NRV X Quantity Selling Item price Model A Copying Machine Replacement Toner Model B Copying Machine Replacement Toner 210 55 20 10 35 16 155 40 190 45 155 29 155 40 170 48 155 40 170 2,000 45 1,500 $ $ 310,000 60,000 $ $ 340,000 67,500 235 145 25 15 20 2 5 2151 65 210 130 1901 210 105 105 1851 185 55 55 Inventory value 185 3,400 55 2,750 $ $ $ 629,000 151,250 1,150,250 $ $ $ 629,000 151,250 1,187,750 Explanation: MV is middle value among Replacement cost, NRV and NRV less profit margin.

Thank you for the question.......kindly rate...... it helps me a lot