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Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $32; replacement cost, $30; selling price, $42; selling costs, $8. The normal profit is 20% of selling price. What unit value should Ross use when applying the lower of cost or market (LCM) rule to ending inventory?

Respuesta :

Answer:

The unit price should be $25.6

Explanation:

Net realization value = selling price - selling cost

                                   = $42 - $8

                                   = $34

Profit margin = 20% of selling price

                      = 0.2 × $42

                      = $8.4

NRV - profit margin:

= $34  - $8.4

= $25.6

Since we don't have replacement cost in the question. Hence, the market value is lower of (NRV, NRV-Profit) = $25.6

The unit price should be $25.6

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