Question

In: Accounting

E9.7 (LO 2) (Lower-of-Cost-or-Market) Wangerin Company follows the practice of pricing its inventory at the lower‐of‐cost‐or‐market,...

E9.7 (LO 2) (Lower-of-Cost-or-Market) Wangerin Company follows the practice of pricing its inventory at the lower‐of‐cost‐or‐market, on an individual-item basis.

Item No.

Quantity

Cost per Unit

Cost to Replace

Estimated Selling Price

Cost of Completion and Disposal

Normal Profit

1320

1,200

$3.20

$3.00

$4.50

$0.35

$1.25

1333

900

2.70

2.30

3.50

0.50

0.50

1426

800

4.50

3.70

5.00

0.40

1.00

1437

1,000

3.60

3.10

3.20

0.25

0.90

1510

700

2.25

2.00

3.25

0.80

0.60

1522

500

3.00

2.70

3.80

0.40

0.50

1573

3,000

1.80

1.60

2.50

0.75

0.50

1626

1,000

4.70

5.20

6.00

0.50

1.00

Instructions

From the information above, determine the amount of Wangerin Company inventory.

Solutions

Expert Solution

Item Quantity Cost per Cost to Estimated Cost of Completion NRV* Normal NRV-Normal Profit Market Lower-of-Cost- Inventory
No. Unit Replace Selling Price and Disposal (Ceiling) Profit (Floor) Value or-Market Valuation
1320 1200 3.20 3.00 4.50 0.35 4.15 1.25 2.90 3.00 3.00 3600
1333 900 2.70 2.30 3.50 0.50 3.00 0.50 2.50 2.50 2.50 2250
1426 800 4.50 3.70 5.00 0.40 4.60 1.00 3.60 3.70 3.70 2960
1437 1000 3.60 3.10 3.20 0.25 2.95 0.90 2.05 2.95 2.95 2950
1510 700 2.25 2.00 3.25 0.80 2.45 0.60 1.85 2.00 2.25 1575
1522 500 3.00 2.70 3.80 0.40 3.40 0.50 2.90 2.90 2.90 1450
1573 3000 1.80 1.60 2.50 0.75 1.75 0.50 1.25 1.60 1.60 4800
1626 1000 4.70 5.20 6.00 0.50 5.50 1.00 4.50 5.20 4.70 4700
Total inventory $ 24285

*Net realizable value (NRV) = Estimated selling price - Cost of completion and disposal

Wangerin Company inventory: $24,285


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