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, 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.
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