Question

Crane Corporation has two products in its ending inventory, each accounted for at the lower of...

Crane Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows:

Product #1

Product #2
Historical cost

$8

$19
Replacement cost

10

13
Estimated cost to dispose

3

8
Estimated selling price

18

31


In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Crane use for products #1 and #2, respectively?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Product #1 unit value = $8, Product #2 unit value = $13.70
Workings:
NRV = Estimated selling price -Estimated cost to dispose
Market = Higher of replacement cost or NRV-Normal Profit
Product #1
NRV 15 =18-3
NRV-Normal profit 9.6 =15-(18*30%)
Market 10 (higher of 10 or 9.6)
Lower of Cost or Market 8 (lower of 10 or 8)
Product #2
NRV 23 =31-8
NRV-Normal profit 13.70 =23-(31*30%)
Market 13.70 (higher of 13.70 or 13)
Lower of Cost or Market 13.70 (lower of 13.70 or 19)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Pharoah Corporation has two products in its ending inventory, each accounted for at the lower of...
Pharoah Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 25% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 Historical cost $10 $19 Replacement cost 8 12 Estimated cost to dispose 7 9 Estimated selling price 20 32 In pricing its ending inventory using the lower-of-cost-or-market, what unit values, rounded to the nearest dollar,...
Daniel Corporation has two products in its ending inventory, each accounted for at the lower of...
Daniel Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows:                                                                       Product #1          Product #2 Historical cost                                                  $25.00              $ 31.00 Replacement cost                                                22.50                  27.00 Estimated cost to dispose                                     5.00                  13.00 Estimated selling price                                        40.00                  65.00 In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Oslo use...
Multiple Choice Question 68 Cullumber Corporation has two products in its ending inventory, each accounted for...
Multiple Choice Question 68 Cullumber Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 20% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 Historical cost $8 $16 Replacement cost 9 15 Estimated cost to dispose 4 8 Estimated selling price 19 33 In pricing its ending inventory using the lower-of-cost-or-market, what unit values should...
Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule for...
Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows: Product A Product B Historical cost $80 $96 Replacement cost 70 98 Estimated cost of disposal 32 47 Estimated selling price 150 200 Required: What is the correct inventory value for each product?...
Beerbo follows the lower-of-cost-or-market (LCM) rule to value its inventory.  All of Beerbo's products have a 10%...
Beerbo follows the lower-of-cost-or-market (LCM) rule to value its inventory.  All of Beerbo's products have a 10% profit margin on selling price. Per unit information about Beerbo Inc.'s inventory of products is as follows: A B C D E Historical cost $80 $100 $50 $90 $95 Replacement cost $88 $90 $45 $36 $105 Estimated selling price $140 $130 $80 $100 $120 Estimated cost to complete $15 $22 $40 $19 $11 Estimated cost to dispose / sell $5 $8 $0 $9 $17...
SLR Corporation has 1,200 units of each of its two products in its year-end inventory. Per...
SLR Corporation has 1,200 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Product 1 Product 2 Cost $ 59 $ 43 Replacement cost 57 35 Selling price 79 45 Selling costs 15 7 Normal profit margin 19 11 Determine the balance sheet carrying value of SLR’s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax...
Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule for...
Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows: Product A Product B Historical cost $80 $96 Replacement cost 70 98 Estimated cost of disposal 32 30 Estimated selling price 150 120 Required:Assume that Stiles uses the FIFO inventory method. What is...
Lower of cost or market Herman Company has three products in its ending inventory. Specific per...
Lower of cost or market Herman Company has three products in its ending inventory. Specific per unit data for each of the products are as follows: Product 1 Product 2 Product 3   Cost $ 33 $ 103 $ 63   Selling price 79 159 109   Disposal costs 6 66 23 Product Cost NRV Per Unit Inventory Value 1 2 3 9. Exercise 9-5 Lower of cost or market The inventory of Royal Decking consisted of five products. Information about the December...
Valuing Inventory at Lower-of-Cost-or-Market Gard Inc. has compiled the following information related to its five products....
Valuing Inventory at Lower-of-Cost-or-Market Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of selling price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item. Note: Round each amount to the nearest dollar. #1 #2 #3 #4 #5 Estimated selling price $66 $76 $82 $100 $130 Original cost (LIFO) 45 48 60...
Bass uses lower-of-cost-or-market to account for the B47AB item in its inventory.  The selling price of Bass...
Bass uses lower-of-cost-or-market to account for the B47AB item in its inventory.  The selling price of Bass Group's item B47AB is $26 per unit. Its (historical) cost is $21 and its replacement cost is $22. The disposal cost (cost to sell) of a B47AB is estimated at $2. The normal profit margin on a B47AB is 40% of selling price. At what value per unit should Bass report this item in its inventory, after applying lower-of-cost-or-market? $20.00 $21.00 $19.00 $13.60
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT