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Setler79 [48]
3 years ago
10

Carla Vista Company sells product 2005WSC for $130 per unit. The cost of one unit of 2005WSC is $127, and the replacement cost i

s $126. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of selling price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?
Business
1 answer:
Alexxx [7]3 years ago
7 0

Answer:

Product 2005WSC  should be reported at $127

Explanation:

Using the lower-of-cost-or-market, Carla Vista Company reports its Inventory at the <em>lower of</em> cost and net realizable value at the end of its financial period.

Cost per unit of 2005WSC is $ 127 (given)

<u>Net realizable value </u><u>per unit of 2005WSC is :</u>

Selling Price ( $127 × 1.40)                   $177.80

Less Estimated Cost to Sell                 ($6.00)

Net realizable value                           $ 171.80

<u>Conclusion :</u>

Therefore, the lower is Cost at $127

Thus product 2005WSC  is measured at $127

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