Saved He Exercise 9-4 Lower of cost or market [LO9-1 Herman Company has three pr

Question

Saved He Exercise 9-4 Lower of cost or market [LO9-1 Herman Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows: Product 1 Product 2Product 3 $110 105 140 48 50 $ 70 60 74 12 32 Cost Roplacemont coat Selling price selling costs Normal profit margin s 40 39 60 25 Required: What unit values should Herman use for each of its products when applying the lower of cost or market (LCM) to ending inventory? Product Cost Replacement NRV NPMarket Inventory NRV cost Value

Explanation / Answer

Product Cost Replacement NRV NRV - NP Market Per unit Cost Inventory value 1 40 38 55 30 38 38 2 110 105 92 42 92 92 3 70 60 62 30 60 60 *NRV = Selling price - Selling costs *Market = middle value of Replacement cost , NRV and NRV - NP *Per unit inventory value = Lower of cost and market

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