Question
Metlock Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the companys inventory records as of December
Metlock Co. follows the practice of valuing its inventory at the lower-of-cost-or-market. The following information is available from the companys inventory records as of December 31, 2020. Item Quantity Unit Cost Replacement Cost/Unit Estimated Selling Price/Unit Completion & Disposal Cost/Unit Normal Profit Margin/Unit A 1,300 $8.55 $9.58 $11.97 $1.71 $2.05 B
1,000 9.35 9.01 10.72 1.03 1.37 C 1,200 6.38 6.16 8.21 1.31 0.68 D 1,200 4.33 4.79 7.18 0.91 1.71 E 1,600 7.30 7.18 7.64 0.80 1.14 Greg Forda is an accounting clerk in the accounting department of Metlock Co., and he cannot understand why the market value keeps changing from replacement cost to net realizable value to something that he cannot even figure out. Greg is very confused, and he is the one who records inventory purchases and calculates ending inventory. You are the manager of the department and an accountant. (a) Calculate the lower-of-cost-or-market using the individual-item approach. Lower-of-Cost-or-Market (Per unit basis) Item A $ Item B $ Item C $ Item D $ Item E $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started