Question
In: Accounting
Product Original Cost Replacement Cost Estimated Disposal Cost Expected Selling Price Normal Profit on Sales A...
| Product | Original Cost |
Replacement Cost |
Estimated Disposal Cost |
Expected Selling Price |
Normal Profit on Sales |
||||||||||
| A | $30.00 | $28.00 | $8.00 | $44.00 | 25.00% | ||||||||||
| B | $44.00 | $42.00 | $10.00 | $54.00 | 20.00% | ||||||||||
| C | $124.00 | $119.00 | $29.00 | $210.00 | 30.00% | ||||||||||
| D | $18.00 | $15.40 | $6.00 | $30.00 | 20.00% | ||||||||||
Using the lower-of-cost-or-market approach applied on an
individual-item basis, compute the inventory valuation that should
be reported for each product on December 31, 2017
Solutions
Expert Solution
Solution:
| Product | |
| A | $ 28.00 |
| B | $ 42.00 |
| C | $ 119.00 |
| D | $ 18.00 |
Working:
1) Calculation of Ceiling And Floor:
| Product | Selling Price (a) | Estimated cost to complete and sell (b) | Net Realizable Value (a-b) [Ceiling | Normal Profit | NRV-Profit [Floor] |
| A | $ 44.00 | $ 8.00 | $ 36.00 | $ 11.00 | $ 25.00 |
| B | $ 54.00 | $ 10.00 | $ 44.00 | $ 10.80 | $ 33.20 |
| C | $ 210.00 | $ 29.00 | $ 181.00 | $ 63.00 | $ 118.00 |
| D | $ 30.00 | $ 6.00 | $ 24.00 | $ 6.00 | $ 18.00 |
2) Calculation of Lower of cost or market:
| Product | Replacement Cost | Net Realizable Value (a-b) [Ceiling | NRV-Profit [Floor] | Market Value | Original Cost | Lower of Cost or Market |
| A | $ 28.00 | $ 36.00 | $ 25.00 | $ 28.00 | $ 30.00 | $ 28.00 |
| B | $ 42.00 | $ 44.00 | $ 33.20 | $ 42.00 | $ 44.00 | $ 42.00 |
| C | $ 119.00 | $ 181.00 | $ 118.00 | $ 119.00 | $ 124.00 | $ 119.00 |
| D | $ 15.40 | $ 24.00 | $ 18.00 | $ 18.00 | $ 18.00 | $ 18.00 |
ekkarill92 answered 3 years agoRelated Solutions
Historical cost Estimated selling price Cost of completion Cost of disposal Current replacement cost Normal profit...
Historical
cost
Estimated
selling price
Cost of
completion
Cost of
disposal
Current
replacement cost
Normal profit
margin
1.
$60
$70
--
$5
$55
$7
2.
$50
$80
$20
$6
$53
$3
3.
$45
$44
$3
$2
$40
$4
4.
$29
$40
$4
$6
$28
$5
5.
$100
$110
$15
$5
$82
$5
For each set of independent facts listed, determine the
appropriate measure of a unit of inventory under U.S. GAAP and
IFRS. Assume the LIFO method is used.
1....
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The estimated project cost, sales, rent, selling price and
production and selling costs of the product of a new project are
given below. Compute the NPV and payback period of the project.
Assume the costs are incurred at the beginning of the year, zero
depreciation, no taxes, and discount rate as 10%, Show all
calculations.
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Project cost (Rs. Million)
40
70
Rent for land, buildings and machinery (Rs....
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of the product, depreciation and salvage value of a new project are
given in the table below. All revenues and costs occur at the end
of the period. The income tax rate is 20%. a) Find NPV of the
project if the discount rate is 10%. b) The promoters has invested
Rs 55 million in Year 1 and Rs 35 million in Year 2. Prepare the
cash flow statement (Sources...
Cost per unit : $3.63 replacement cost : $3.34 Estimated selling price: $4.80 Cost of completion...
Cost per unit : $3.63
replacement cost : $3.34
Estimated selling price: $4.80
Cost of completion and disposal: $1.94
Normal profit margin (%) of selling price: 18%
Estimated Selling price - Costs of completion and disposal =
NRV
$4.80 - $1.94 = $3.86
Sale price of inventory x Profit Margin (%)
$4.80 x 18% = 0.864
NRV - the Normal Profit Margin
$3.86 - 0.864 = 1.996
Replacement cost = $3.34
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95. The target cost is determined by taking a.the expected selling price and adding desired profit...
95.
The target cost is determined by taking
a.the expected selling price and adding desired profit
b.the expected selling price and subtracting the desired
profit
c.the expected selling price and subtracting the budgeted
standard cost
d.the budgeted standard cost and reducing it by 10%
94.
Using the variable cost method, determine the selling price
(rounded to the nearest dollar) for 30,000 units using the
following data:
Variable cost per unit
$15
Total fixed costs
$90,000
Desired profit
$150,000
a.$23
b.$10...
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A product has a prime cost of £22,700. It takes 31 hours to make each unit. The overhead absorption rate is £20.00 per labour hour.What should the selling price of the product be if the company’s policy is to make a profit of 25% on selling price?Calculate and enter your answer to the nearest £.
What are the returns on the following investments? Investment Original Cost of Investment Selling Price of...
What are the returns on the following investments?
Investment
Original Cost of Investment
Selling Price of Investment
Distributions Received
Dollar Return
Percent Return
CD
$500.00
$540.00
$0.00
Stock
$23.00
$34.00
$2.00
Bond
$1,040.00
$980.00
$88.00
Bicycle
$400.00
$220.00
$0.00
Using the following returns, calculate the average returns, the
variances, and the standard deviations for X and Y.
Returns
Year
X
Y
1
16%
34%
2
18
-7
3
-9
-12
4
21
41
5
2
10
Break-Even Sales Currently, the unit selling price of a product is $380, the unit variable cost...
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Currently, the unit selling price of a product is $380, the unit
variable cost is $310, and the total fixed costs are $1,001,000. A
proposal is being evaluated to increase the unit selling price to
$420.
a. Compute the current break-even sales
(units).
units
b. Compute the anticipated break-even sales
(units), assuming that the unit selling price is increased and all
costs remain constant.
units
Break-Even Sales and Cost-Volume-Profit Chart For the coming year, Cleves Company anticipates a unit selling price...
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2. Compute the sales (units) required to
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Required:
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2. Compute the sales (units) required to
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3. Construct a cost-volume-profit chart,
assuming maximum sales of 22,400 units within the relevant range.
From your chart, indicate whether each of the following sales
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