Question

A company normally sells its product for $18 per unit. However, the selling price has fallen...

A company normally sells its product for $18 per unit. However, the selling price has fallen to $12 per unit. This company's current inventory consists of 300 units purchased at $16 per unit. Replacement cost has now fallen to $7 per unit. Calculate the value of this company's inventory at the lower of cost or market.

Homework Answers

Answer #1

Given that the company's current inventory consists of 300 units.
Current selling price in market=$12 per unit
Replacement cost=$7 per unit

Value of inventory (considering the current selling price in market)=Selling price in market*Total units available in inventory
=$12*300=$3600

Value of inventory (considering replacement cost)=Replacement cost price*Total units available in inventory
=$7*300=$2100

Value of the company's inventory at the lower of cost (that is $2100) or market(that is $3600)=$2100

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
Liliac Company sells a single product. The selling price of the product is $300 per unit....
Liliac Company sells a single product. The selling price of the product is $300 per unit. Variable cost is $180 per unit. Fixed cost is $360,000 per period. Currently, the company is selling 5,000 units of the product. Assume that the income tax rate is 20%. If the company wants to make a profit of $480,000 after tax, how many units of the products should be sold? A. 5,500 units B. 6,000 units C. 7,000 units D. 8,000 units
A company sells 1,200 units during the first quarter of the year at a selling price...
A company sells 1,200 units during the first quarter of the year at a selling price of $25 per unit.  In addition, the company has a beginning inventory of 600 units that were purchased at $10 per unit, and the following purchases and sales. Date Units sold Units purchased Cost per unit January 10         300    $11 January 25 450 February 7    400 $12 February 14 200 March 5 300 $14 March 27 550 If the company uses...
Ross Electronics has one product in its ending inventory. Per unit data consist of the following:...
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; replacement cost, $18; selling price, $30; selling costs, $4. The normal profit is 30% of selling price. What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?
A company's product sells at $15 per unit and has a $7 per unit variable cost....
A company's product sells at $15 per unit and has a $7 per unit variable cost. The company's total fixed costs are $98,000. The break-even point in units is: a. 5,158. b. 7,000. c. 14,000. d. 12,250. e. 8,167.
Green Company sells its product for $11000 per unit. Variable costs per unit are: manufacturing, $5900;...
Green Company sells its product for $11000 per unit. Variable costs per unit are: manufacturing, $5900; and selling and administrative, $120. Fixed costs are: $31200 manufacturing overhead, and $41200 selling and administrative. There was no beginning inventory at 1/1/18. Production was 24 units per year in 2018–2020. Sales were 24 units in 2018, 20 units in 2019, and 28 units in 2020. Income under absorption costing for 2019 is?
Forest Company has five products in its inventory. Information about the December 31, 2021, inventory follows....
Forest Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price A 1,000 $10 $12 $16 B 800 $15 $11 $18 C 600 $3 $2 $8 D 200 $7 $4 $6 E 600 $14 $12 $13 The cost to sell for each product consists of a 15 percent sales commission. The normal profit for each product is 40 percent of the selling price. The carrying...
Green Company sells its product for $10900 per unit. Variable costs per unit are: manufacturing, $6500;...
Green Company sells its product for $10900 per unit. Variable costs per unit are: manufacturing, $6500; and selling and administrative, $135. Fixed costs are: $50400 manufacturing overhead, and $60400 selling and administrative. There was no beginning inventory at 1/1/18. Production was 36 units per year in 2018–2020. Sales were 36 units in 2018, 32 units in 2019, and 40 units in 2020. Income under variable costing for 2020 is $48280. $54780. $54200. $59800.
A company's product sells at $12.10 per unit and has a $5.15 per unit variable cost....
A company's product sells at $12.10 per unit and has a $5.15 per unit variable cost. The company's total fixed costs are $97,500. The break-even point in units is:
Steven Company has fixed costs of $289,518. The unit selling price, variable cost per unit, and...
Steven Company has fixed costs of $289,518. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price per Unit Variable Cost per Unit Contribution Margin per Unit X $848 $318 $530 Y 645 345 300 The sales mix for Products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y. Round answers to the nearest whole number. units...
ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per...
ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Company had the following inventory information available for the month of May: May 1 Beginning inventory 1,600 units @ $12 cost per unit May 8 Sold 1,100 units May 13 Purchased 1,700 units @ $24 cost per unit May 18 Sold 1,000 units May 21 Purchased 1,500 units @ $18 cost per unit May 28 Sold 800 units May 30 Purchased 1,200...