Question
In: Accounting
Herman Company has three products in its ending inventory. Specific per unit data at the end...
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 2 | Product 3 | |||||||||
| Cost | $ | 26 | $ | 96 | $ | 56 | |||||
| Replacement cost | 24 | 91 | 46 | ||||||||
| Selling price | 46 | 126 | 63 | ||||||||
| Selling costs | 8 | 31 | 14 | ||||||||
| Normal profit margin | 11 | 36 | 18 | ||||||||
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 Cost | NRV | NRV-NP | MARKET | Per Unit Inventory Value |
| 1 | ||||||
| 2 | ||||||
| 3 |
Solutions
Expert Solution
| Answer | ||||||
|
Product |
Cost | Replacement cost | NRV | NRV-NP | Market | Per unit inventory value |
| 1 | $ 26 | $ 24 | $ 38 | $ 27 | $ 27 | $ 26 |
| 2 | $ 96 | $ 91 | $ 95 | $ 59 | $ 91 | $ 91 |
| 3 | $ 56 | $ 46 | $ 49 | $ 31 | $ 46 | $ 46 |
| Formula used | ||||||
| NRV = Selling price - selling costs | ||||||
| NP = Normal profit margin | ||||||
| Market value = Middle value of (Replacement cost, NRV or NRV - NP) | ||||||
| Per unit inventory value = Lower of (cost or market) | ||||||
ekkarill92 answered 2 years agoRelated Solutions
Herman Company has three products in its ending inventory. Specific per unit data at the end...
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 2
Product 3
Cost
$
39
$
109
$
69
Selling price
97
177
127
Costs to sell
5
78
29
Required:
What unit values should Herman use for each of its products when
applying the lower of cost or net realizable value (LCNRV) rule to
ending inventory?
Product
Cost...
Ross Electronics has one product in its ending inventory. Per unit data consist of the following:...
Ross Electronics has one product in its ending inventory. Per
unit data consist of the following: cost, $25; replacement cost,
$23; selling price, $35; selling costs, $8. The normal profit is
30% of selling price.
What unit value should Ross use when applying the lower of cost or
market (LCM) rule to ending inventory?
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20
Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; replacement cost, $18; selling price, $30; selling costs, $4. The normal profit is 30% of selling price. What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
84.00
$
70.00
$
74.00
Variable expenses:
Direct materials
25.20
21.00
9.00
Other variable expenses
25.20
31.50
42.80
Total variable expenses
50.40
52.50
51.80
Contribution margin
$
33.60
$
17.50
$
22.20
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 750 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling
price
$
88.00
$
72.00
$
78.00
Variable
expenses:
Direct
materials
26.40
18.00
9.00
Other variable
expenses
26.40
36.00
45.60
Total variable
expenses
52.80
54.00
54.60
Contribution
margin
$
35.20
$
18.00
$
23.40
Contribution
margin ratio
40
%
25
%
30
%
The company estimates that it can sell 900 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit): Product A B C
Selling price $ 88.00 $ 72.00 $ 78.00 Variable expenses: Direct
materials 26.40 18.00 9.00 Other variable expenses 26.40 36.00
45.60 Total variable expenses 52.80 54.00 54.60 Contribution margin
$ 35.20 $ 18.00 $ 23.40 Contribution margin ratio 40 % 25 % 30 %
The company estimates that it can sell 900 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
60.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
27.00
34.40
Total variable expenses
43.20
45.00
43.40
Contribution margin
$
28.80
$
15.00
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 1,000 units of each
product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
80.00
$
66.00
$
72.00
Variable expenses:
Direct materials
24.00
16.50
12.00
Other variable expenses
24.00
33.00
38.40
Total variable expenses
48.00
49.50
50.40
Contribution margin
$
32.00
$
16.50
$
21.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 700 units of each product
per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
60.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
27.00
34.40
Total variable expenses
43.20
45.00
43.40
Contribution margin
$
28.80
$
15.00
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 1,000 units of each
product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data
concerning the three products follow (per unit):
Product
A
B
C
Selling price
$
72.00
$
54.00
$
62.00
Variable expenses:
Direct materials
21.60
18.00
9.00
Other variable expenses
21.60
22.50
34.40
Total variable expenses
43.20
40.50
43.40
Contribution margin
$
28.80
$
13.50
$
18.60
Contribution margin ratio
40
%
25
%
30
%
The company estimates that it can sell 700 units of each product
per month. The same...
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