Assignment 3

Question 1:

The following table gives data pertinent to the inventory of four different products. Normal profit margin on each of the four inventory items is 10 percent of the selling price of the item.

Use the information above and in the table below to inventory value under the lowerofcostormarket rule for each of the 4 inventory items (A, B, C & D), under the following assumptions:

Assume that the uses FIFO to calculate the cost of its inventory.

Assume that the uses LIFO to calculate the cost of its inventory.

Provide these calculated values in the boxes below.

	A	B	C	D	E
Inventory cost	$83	$102	$78	$40	$98
Selling Price	90	100	110	30	90
Replacement cost	75	85	86	35	64
Estimated cost to complete the sales	15	10	15	3	20
(1) NPV (ceiling)
(2) Floor
(3) Unit inv value under LCM rule, assume cost is calc. using LIFO
(4) Unit inv value under LCM rule, assume cost is calc using FIFO

***Please note that work must be shown***