Question

498 SECTION 2 Assets The inventory of Royal Decking consisted of five products. Information about the December 31, 2018. in is as follows: E 9-2 Lower of cost br net realizable value .LO9-1 Product Cost $ 40 80 40 Per Unit Selling Price $ 60 100 80 130 100 20 30 Exan Costs to sell consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. Required: What unit value should Royal Decking use for each of its products when applying the lower of cost or net realiz- able value (LCNRV) rule to units of ending inventory?

hello guys, I need detailed info with this

Answer 1

Net realizable value calculation
Product	A	B	C	D	E
Cost                              a	40	80	40	100	20
Selling Price               1	60	100	80	130	30
less sales commission 10% of selling price 2	6	10	8	13	3
less shipping cost 5% of cost                        3	2	4	2	5	1
Net realizable value          = 1-(2+3)                      b	52	86	70	112	26
Lower of cost and NRV	40	80	40	100	20

Net realizable value is Sale price minus all expenses to actualize the sale. In this case, sales commission and shipping cost are necessary expenses to make sale happen so they will deducted out of sale price to calculate net realizable value.

Lower of cost and net realizable value is given too.