Question

The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Replacement Cost Selling Price A $ 50 $ 45 $ 70 B 90 80 110 C 50 65 90 D 110 80 140 E 30 38 40 Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal profit is 30% of selling price.

Answer 1

Answer:

A $   50

B $   88

C $   50

D $   110

E $    30

Explanation:

   

Cost Selling Price Sales Cost  NRV

A 50             70       14     56.0

B 90             110       22     88.0

C 50              90       18     72.0

D 110             140       28         112.0

E 30              40         8          32.0

We pick between the net realizable value and the historic cost

In all cases but B , the Cost is lower than NRV