Riverbed Company follows the practice of pricing its inventory at the lower-of-c
ID: 2589563 • Letter: R
Question
Riverbed Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.
Item No.
Quantity
Cost per Unit
Cost to Replace
Estimated Selling Price
Cost of Completion and Disposal
Normal Profit
1320 1,400 $3.84 $3.60 $5.40 $0.42 $1.50
1333 1,100 3.24 2.76 4.20 0.60 0.60
1426 1,000 5.40 4.44 6.00 0.48 1.20
1437 1,200 4.32 3.72 3.84 0.30 1.08
1510 900 2.70 2.40 3.90 0.96 0.72
1522 700 3.60 3.24 4.56 0.48 0.60
1573 3,200 2.16 1.92 3.00 0.90 0.60
1626 1,200 5.64 6.24 7.20 0.60 1.20
From the information above, determine the amount of Riverbed Company inventory.
The amount of Riverbed Company’s inventory
$
Explanation / Answer
Item No. Cost per unit Replacement cost Net realizable value* Net realizable value less normal profit Designated market value Lower of cost or market Quantity Value of inventory 1 2 3 4 5 6 7 8 (Mid value of 2,3 & 4) (Lower of 1 & 5) (6*7) 1320 3.84 3.6 4.98 3.48 3.6 3.6 1400 5040 1333 3.24 2.76 3.6 3 3 3 1100 3300 1426 5.4 4.44 5.52 4.32 4.44 4.44 1000 4440 1437 4.32 3.72 3.54 2.46 3.54 3.54 1200 4248 1510 2.7 2.4 2.94 2.22 2.4 2.4 900 2160 1522 3.6 3.24 4.08 3.48 3.48 3.48 700 2436 1573 2.16 1.92 2.1 1.5 1.92 1.92 3200 6144 1626 5.64 6.24 6.6 5.4 6.24 5.64 1200 6768 Total value of inventory 34536 Net realizable value=Estimated selling price-Cost of completion and disposal
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