[Crunchtime]

Golden 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

$15.00

$45.00

Replacement cost

17.00

43.00

Estimated cost to dispose

5.00

26.00

Selling price

30.00

100.00

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

I don’t know why but I can’t grasp LCM? please help.

AUD-77
BEC-70,73,68,74 SH##!!!!!, 80
REG-73,76
FAR -74,82

Ethics here I come!!

[marqzho]

If the answer are $15 and $44, then keep reading

product #1

1) what is cost?
$15

2) what is market? middle of the following three numbers
A)Selling price-cost of disposal = NRV= 30-5=$25
B)Replacement cost =$17 <—-Middle of ABC
C) Ans A – profit margin = $25 – 30*30% = 14

So market = $17 Cost=$15

LOWER of Cost or market = $15

Same thing to product #2

REG 90
FAR 95
AUD 98
BEC 84

[Vanessachy]

basically replacement cost cannot be higher than celling and lower than floor. So, if replacement cost is between celling (NRV=selling price-cost to complete the sell) and floor(NRV-margin), you use replacement cost to compare with original cost and pick the lower one. If replacement cost is lower than floor, use floor to compare with original cost and pick the lower one. If replacement cost is more than celling, you need to use celling,and then use celling to compare with original cost and pick the Lower one.

Far 10/26/2015, 64, 1/4/2016, 82
Reg 7/10/2015, 60, 2/27/2016, 86
Aud, 5/9/2016, 74 (ouch), 7/26/2016, I cannot wait to take this test again
Bec, 6/10/2016, 70,9/8 retake

[Crunchtime]

Thanks you too, this really helped. I believe I got this and will be easy points on friday!!

AUD-77
BEC-70,73,68,74 SH##!!!!!, 80
REG-73,76
FAR -74,82

Ethics here I come!!

[Crunchtime]

Thanks you too, this really helped. I believe I got this and will be easy points on friday!!

AUD-77
BEC-70,73,68,74 SH##!!!!!, 80
REG-73,76
FAR -74,82

Ethics here I come!!

[marqzho]

Good Luck!

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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