Question

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 NRV Per Unit Inventory Value 1 2 3

Answer 1

• WORKING TO CALCULATE NET REALIZABLE VALUE

	Selling Price	Costs to sell	NRV
Product	[A]	[B]	[C = A - B]
1	$                                             97.00	$                     5.00	$                  92.00
2	$                                          177.00	$                   78.00	$                  99.00
3	$                                          127.00	$                   29.00	$                  98.00

• Answer, based on above

Product	Cost	NRV	Per unit Inventory Value
1	$                                             39.00	$                   92.00	$                  39.00
2	$                                          109.00	$                   99.00	$                  99.00
3	$                                             69.00	$                   98.00	$                  69.00