1. Apogee Group purchases for resale 2,000 calculators for $16 each. At year end

Question

1. Apogee Group purchases for resale 2,000 calculators for $16 each. At year end, the replacement cost is $15 each, the estimated selling price, $21, the disposal cost, $2, and the estimated markup, $4. If Apogee uses LCM costing, on a per-unit basis, what is the ceiling? a. $21 b. $19 c. $17 d. $15

2. Apogee Group purchases for resale 2,000 calculators for $16 each. At year end, the replacement cost is $15 each, the estimated selling price, $21, the disposal cost, $2, and the estimated markup, $4. If Apogee uses LCM costing, on a per-unit basis, what is the floor? a. $21 b. $19 c. $17 d. $15

3. Apogee Group purchases for resale 2,000 calculators for $16 each. At year end, the replacement cost is $15 each, the estimated selling price, $21, the disposal cost, $2, and the estimated markup, $4. If Apogee uses LCM costing, on a per-unit basis, what is the market? a. $21 b. $19 c. $17 d. $15

4. Apogee Group purchases for resale 2,000 calculators for $16 each. At year end, the replacement cost is $15 each, the estimated selling price, $21, the disposal cost, $2, and the estimated markup, $4. If Apogee uses LCM costing, on a per-unit basis, what is the lower of cost or market? a. $21 b. $19 c. $17 d. $15

5. Your company has not yet decided how it will apply LCM to its inventory. If management wants to minimize the value of ending inventory, it should: a. apply LCM by item. b. apply LCM by group, or "by class." c. apply LCM to total inventory. d. any one of the above because LCM does not affect the value of inventory.

Explanation / Answer

1. Apogee Group uses LCM costing method which means inventory should be valued at lower of Cost or Market Vale.

As the Apogee group purchases calculators for resale, the lower of  Cost($15) and market price($19 seling price less disposal cost)

i.e: Answer is d) $15

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