Data related to the inventories of Kimzey Medical Supply are presented below: Surgical Surgical Rehab Rehab...

Data related to the inventories of Kimzey Medical Supply are presented below:

	Surgical			Surgical				Rehab				Rehab
	Equipment			Supplies				Equipment				Supplies
Selling price	$	260		$	120		$		340		$		165
Cost		170			90				250				162
Replacement cost		240			80				235				158
Costs to sell		30			5				25				10
Normal gross profit ratio		30	%		30	%			30	%			20	%

In applying the lower of cost or market rule, the inventory of rehab equipment would be valued at:

		A) $315.
		B) $247.
		C) $150.
		D) $235.

Expert Solution

Correct Option D i.e. $235

	Rehab
	Equipment
Selling price	340
Cost	250
Replacement cost	235
Costs to sell	25
Normal gross profit ratio	30
NRV	315
NRV- Gross profit	220.50

Market Price	235
Lower of cost or Market price	235

Note 1: Market price is same as replacement cost, but if replacement cost is more than NRV then NRV will be the market value, Also market price should not be less then NRV-GP.otherwise NRV-Normal profit will be market price

ekkarill92 answered 2 years ago

What are teh descriptions of the sections within the Medical and Surgical-related sections?

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