Exercise 2

Presented below is information related to Dust Inc's inventory:

per unit A B

Cost $197.00 111.00 53.00

Selling price 207.00 159.00 79.00

Cost to sell 21.00 7.00 5.00

Cost to complete 23.00 29.00 20.00

Determine the following:

a) the net realizable value for each item (6 pts), and

b) the carrying value of each item under LCNRV (9 pts).

Exercise 3 (30 points) Answer the following questions:

1. In what ways are the inventory accounts of a merchandising company different from those of a manufacturing company (15 pts)?

2. Distinguish between product costs and period costs as they relate to inventory (15 pts).