Question

Royal Decking has five products in its inventory. Information about the December 31, 2021 inventory is below:

Answer 1

Answer:

Royal Decking

A) Per unit value for each of Royal Decking's products, applying LCNRV:

Product   Cost   Sales Price   NRV                          LCNRV

A              $40      $60           $44 ($60 - 12 - 4)      $40

B                80       100           $72 ($100 - 20 - 8)    $72

C                40        80           $60 ($80 - 16 - 4)       $40

D               100      130           $84 ($130 - 26 - 10)   $84

E                 20       30           $22 ($30 - 6 - 2)       $20

B. Total Inventory on the balance sheet is:

$256,000

Explanation:

a) Data and Calculations:

Ending Inventory at December 31, 2021:

Product   Cost   Sales Price   NRV                          LCNRV  Inventory value

A              $40      $60           $44 ($60 - 12 - 4)      $40          $40,000

B                80       100           $72 ($100 - 20 - 8)    $72          $72,000  

C                40        80           $60 ($80 - 16 - 4)       $40          $40,000

D               100      130           $84 ($130 - 26 - 10)   $84           $84,000

E                 20       30           $22 ($30 - 6 - 2)       $20          $20,000

Total inventory value                                           $256       $256,000

= ($256 * 1,000)

Selling costs = 20% of selling price

Shipping costs = 10% of cost