Practice Problem 9-1 (Part Level Submission) Marin, Inc. values its inventory at

Question

Practice Problem 9-1 (Part Level Submission)

Marin, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2017.

Item

Quantity

Unit
Cost

Replacement
Cost/Unit

Estimated Selling
Price/Unit

Completion & Disposal
Cost/Unit

Normal Profit
Margin/Unit

0.86

Calculate the lower-of-cost-or-market using the individual-item approach.

Lower-of-Cost-or-Market
(Per unit basis)

Item

Quantity

Unit
Cost

Replacement
Cost/Unit

Estimated Selling
Price/Unit

Completion & Disposal
Cost/Unit

Normal Profit
Margin/Unit

X490 7,956 $9.75 $9.32 $10.92 $2.34 $2.65 X512 3,861 5.46 5.85 6.94 0.20 1.40 X682 14,040 14.82 14.51 24.61 2.54 7.02 Z195 9,750 11.12 10.92 15.44 1.09 4.49 Z846 6,708 9.36 9.95 10.88 1.64

0.86

Explanation / Answer

Ceiling = expected selling price - estimated disposal cost floor    = ceiling - normal profit on sales product Ceiling floor Designated Cost LCM market X490 8.58 5.93 8.58 9.75 8.58 X512 6.74 5.34 5.85 5.46 5.46 X682 22.07 15.05 15.05 14.82 14.82 Z195 14.35 9.86 10.92 11.12 10.92 Z846 9.24 8.38 9.24 9.36 9.24

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