This data is for selected inventory items at Office Supply Company. Quantity Uni

Question

This data is for selected inventory items at Office Supply Company. Quantity Unit Cost Market Value Printer Cartridges Item 119 64 $ 30.00 $ 30.50 Item 120 74 26.00 23.50 Item 121 104 30.00 27.00 Fax Machines Item 210 22 93.00 96.00 Item 211 17 199.00 193.00 Item 212 16 232.00 217.00 1 & 2. Determine the total amount to be reported as the inventory valuation at cost or market, whichever is lower, under lower of cost or market for each item separately and lower of total cost or total market. (Round your answers to 2 decimal places.) 3. Determine the total amount to be reported as the inventory valuation at cost or market, whichever is lower, under lower of total cost or total market by group. (Round your answers to 2 decimal places.) Analyze: Which valuation method will yield the highest net income? Lower of Cost or Market by groups or in total Lower of Cost or Market for each item separately Lower of total cost or total market by group Lower of total cost or total market

Explanation / Answer

1)

1)Inventory reportable under each item seperately : $ 15266

2)lower of total cost or market : 16105 or 15364 = $ 15364

3)Since the ending inventory reportable under lower of total cost or market is higher as a result cost of goods sold will be lower resulting in higher in net income .

option B will result in higher income :lower of total cost or total market.

Item Unit cost Market Lower of cost or market 119 64 30*64=1920 30.5*64=1952 1920   [1920 or 1952] 120 74 26*74=1924 23.5*74=1739 1739 121 104 30*104=3120 27*104=2808 2808 210 22 93*22=2046 96*22=2112 2046 211 17 199*17=3383 193*17=3281 3281 212 16 232*16=3712 217*16=3472 3472 16105 15364 15266

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.