Question

5. Nugent Company manufactures custom phone covers. Most of the company's phone covers are sold on the basis of catalog prices. At December 31, 2018, the following phone covers appear in the company's inventory Phone Cover Models 2018 catalog selling price LIFO cost per inventory list Estimated current cost to manufacture Sales commissions and estimated other costs of disposal 2018 catalog selling price Pretentious $800 750 710 Decadent $780 750 680 Pookums $460 500 400 Bunny $250 250 260 50 860 50 800 30 600 20 260 The 2018 catalog was in effect through August 2018, and the 2018 catalog is effective as of September 1, 2018. All catalog prices are net of the usual discounts. Generally, the company attempts to obtain a 25% gross profit on selling price and has usually been successful doing so Instructions a. At what amount should each of the four phone covers models appear in the company's December 31, 2018, inventory, assuming that the company has adopted a LIFO, lower- of-cost-or-market approach for valuation of inventories on an individual-item basis?

Answer 1

The Cost of Manufacture is not to be considered since it is estimated and not actual cost incurred.

Decadent 800 SI NO Phone Cover Models 1 2018 Catalog Selling Price 2 Less: Sales Commission 3 Market Value (1-2) 4 LIFO Cost as per Inventory List 5 Valuation of Inventory as at Dec 31, 2018 (Lower of 3 or 4 above) Pretentious 860 (50) 810 750 (50)| in $ Bunny 260 (20) 240 Pookums 600 (30) 570 500 750 750 250 750 500