Question

In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases, under the lower-of-cost-or-market rule. (Round answers to 2 decimal places, e.g. 52.75.) Cases 1 2 33 5 $13.60 $14.40 $14.50 $16.90 $15.60 Cost Net realizable value 19.50 13.30 11.70 15.60 15.90 Net realizable value less normal profit 13.70 18.00 11.96 9.90 14.20 Market (replacement cost) 13.90 19.00 12.40 10.20 17.30 Cases 1 2 3 4 5 Unit inventory price $

Answer 1

	1	2	3	4	5
Cost	13.6	14.4	14.5	16.9	15.6
NRV (a)	15.6	19.5	13.3	11.7	15.9
NRV- Normal profit (b)	13.7	18	11.96	9.9	14.2
Market replacement cost (c)	13.9	19	12.4	10.2	17.3

NRV = middle value of the a,b and c
Min	13.7	18	11.96	9.9	14.2
Max	15.6	19.5	13.3	11.7	17.3
Middle value ie it is not min and max ie NRV	13.9	19	12.4	10.2	15.9

	1	2	3	4	5
Cost	13.6	14.4	14.5	16.9	15.6
NRV	13.9	19	12.4	10.2	15.9
Unit Inventory Price ( Lower of cost or NRV)	13.6	14.4	12.4	10.2	15.6

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