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18 April, 16:30

Cullumber Inc has the following information related to an item in its ending inventory. Acer Top has a cost of $31, a replacement cost of $30, a net realizable value of $33, and a normal profit margin of $4. What is the final lower-of-cost-or-market inventory value for Acer Top?

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  1. 18 April, 19:26
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    final lower-of-cost-or-market inventory value for Acer Top is $29

    Explanation:

    given data

    Acer Top cost = $31

    replacement cost = $30

    net realizable value = $33

    normal profit margin = $4

    to find out

    final lower-of-cost-or-market inventory value for Acer Top

    solution

    we get here market value that is

    market value = net realizable value - Normal profit margin ... 1

    market value = $33 - $4 = $29

    and as we know Ending inventory is Lower of cost or market inventory

    so here Lower of $31 or $29 is $29

    final lower-of-cost-or-market inventory value for Acer Top is $29
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