Question

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

Homework Answers

Answer #1

Answer- $ 21

Inventory is valued at lower of historical cost or maket

Historical Cost of $ 21 is lower than market replacement cost of $ 22 .

In market , the higher between replacement cost of $ 22 and net realisable value less Net profit of $13 .60 is to be considered , which is replacement cost of $22

Item Historical Cost Replacement NRV           ( 26-2) NRV-NP                 (24-(40%*26))
B47AB $21 $22 $24 $13.6
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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?...
Under the lower-of-cost-or-market basis in valuing inventory, cost is defined as selling price less cost of...
Under the lower-of-cost-or-market basis in valuing inventory, cost is defined as selling price less cost of disposal. selling price. historical cost plus 10%. selling price less markup.
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...
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market...
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10. Item Inventory Quantity Unit Cost Price Unit Market Price MX62 116 $31 $26 BJ54 225 16 18 $_____
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...
Sarasota Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is...
Sarasota Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2017. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,200 $ 7.58 $ 8.48 $ 10.61 $ 1.52 $ 1.82 B 900 8.28 7.98 9.49 0.91 1.21 C 1,100 5.66 5.45 7.27 1.16 0.61 D 1,100 3.84 4.24 6.36 0.81 1.52 E 1,500 6.46 6.36...
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...
The floor to be used in applying the lower-of-cost-or-market method to inventory is determined as the...
The floor to be used in applying the lower-of-cost-or-market method to inventory is determined as the a. replacement cost. b. net realizable value less normal profit margin. c. selling price less costs of completion and disposal. d. net realizable value.
Wildhorse Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Wildhorse 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 1,600 $3.97 $3.72 $5.58 $0.43 $1.55 1333 1,300 3.35 2.85 4.34 0.62 0.62 1426 1,200 5.58 4.59 6.20 0.50 1.24 1437 1,400 4.46 3.84 3.97 0.31 1.12 1510 1,100 2.79 2.48 4.03 0.99 0.74 1522 900 3.72 3.35 4.71 0.50 0.62 1573 3,400 2.23...
Skysong Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Skysong 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 1,500 $3.39 $3.18 $4.77 $0.37 $1.33 1333 1,200 2.86 2.44 3.71 0.53 0.53 1426 1,100 4.77 3.92 5.30 0.42 1.06 1437 1,300 3.82 3.29 3.39 0.27 0.95 1510 1,000 2.39 2.12 3.45 0.85 0.64 1522 800 3.18 2.86 4.03 0.42 0.53 1573 3,300 1.91...