Presented below is information related to Bonita Inc.’s inventory, assuming Bonita uses lower-of-LIFO cost-or-market. (per unit)...

Presented below is information related to Bonita Inc.’s inventory, assuming Bonita uses lower-of-LIFO cost-or-market.

(per unit)	Skis	Boots	Parkas
Historical cost	$224.20	$125.08	$62.54
Selling price	250.16	171.10	87.03
Cost to distribute	22.42	9.44	2.95
Current replacement cost	239.54	123.90	60.18
Normal profit margin	37.76	34.22	25.08

Determine the following:

(a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis. (Round answers to 2 decimal places, e.g. 52.75.)

Ceiling Limit		$
Floor Limit		$

(b) The amount that should be used in the lower-of-cost-or-market comparison of boots. (Round answers to 2 decimal places, e.g. 52.75.)

(c) The amount that should be used to value parkas on the basis of the lower-of-cost-or-market. (Round answers to 2 decimal places, e.g. 52.75.)

Solutions

Expert Solution


a)	Skis
	Ceiling
	Selling price				250.16
	less:cost to distribute				-22.42
	Ceiling				227.74	answer


	Floor
	NRV				227.74
	less:normal profit margin				-37.76
	Floor				189.98	answer



b)	Boots
	Ceiling
	Selling price				171.1
	less:cost to distribute				-9.44
	Ceiling				161.66


	Floor
	NRV				161.66
	less:normal profit margin				-34.22
	Floor				127.44

	Cost	Replacement	ceiling	Floor	MV	LCM
	125.08	123.9	161.66	127.44	127.44	125.08


	Answer	125.08


c)	Parkas
	Ceiling
	Selling price				87.03
	less:cost to distribute				-2.95
	Ceiling				84.08


	Floor
	NRV				84.08
	less:normal profit margin				-25.08
	Floor				59

	Cost	Replacement	ceiling	Floor	MV	LCM
	62.54	60.18	84.08	59	60.18	60.18


	Answer	60.18

ekkarill92 answered 1 year ago

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