Question

Nine Company uses FIFO to account for inventory. Nine Company's inventory consists of two products: Product A and Product B. For each product, costs to sell include sales commissions of 10% of the selling price and shipping costs equal to 5% of the selling price. The accounting system revealed the following information as of December 31, 2018.

Product	Units	Cost per unit	Price per unit
A	1,000	$40	$60
B	1,500	90	100

Determine the amount that Nine Company should report for inventory for Product B as of December 31, 2018.

Answer 1

	Product	Units	Cost PU	Price Per Unit
	A	1000	40.00	60.00
	B	1500	90.00	100.00
	Calculation of NRV for Each of the products:
	Product	Price Per Unit	Sales Commission	Shipping Costs	NRV
	A	60.00	6.00	3.00	51.00
	B	100.00	10.00	5.00	85.00
	Inventory Valuation at the end should be done on lower of Cost or NRV:
	Product	Cost PU	NRV	Valuation
	A	40.00	51.00	40.00	(Cost or NRV)
	B	90.00	85.00	85.00	(Cost or NRV)
	Inventory Reporting:
	Product	Units	Valuation	Valuation
	A	1000	40.00	40,000
	B	1500	85.00	1,27,500
	Answer for B is 127500/-