Question

Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $24; selling price, $40; selling costs, $9. What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inventory?

Answer 1

Answer:

Unit value would be $24

Explanation:

Lower of cost is the method which is described as where the inventory that should be recorded at the lowest or the net realizable value (NRV). This method is linked with the principle or the guideline of conservatism.

When Ross is applying the method of lower of cost or net realizable value, to the ending inventory, the unit value would the cost per unit that is $24 and the selling price which is to be taken is $9 as it is the lowest.