The inventory of Royal Decking consisted of five products. Information about the

Question

The inventory of Royal Decking consisted of five products. Information about the December 31, 2018, inventory is as follows:

Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal gross profit percentage is 30% 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.)

Per Unit Product Cost Replacement Cost Selling Price A $ 44 $ 39 $ 64 B 84 74 104 C 44 59 84 D 104 74 134 E 24 32 34

Explanation / Answer

Product Cost Replacement cost NRV NRV - NP Market Per Unit Inventory Value A $44 $39 52.2 33 $39.00 $39 B 84 74 84.2 53 $74.00 $74 C 44 59 69.2 44 $59.00 $44 D 104 74 108.7 68.5 $74.00 $74 E 24 32 27.7 17.5 $27.70 $24

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