Given the acquisition cost of product ALPHA is $34, the net realizable value for product ALPHA is $33.50, the normal profit for product ALPHA is $2.50, and the market value (replacement cost) for product ALPHA is $29.50, what is the proper per unit inventory price for product ALPHA?

Question

Business

Aimee Joseph

11 April, 13:15

Given the acquisition cost of product ALPHA is $34, the net realizable value for product ALPHA is $33.50, the normal profit for product ALPHA is $2.50, and the market value (replacement cost) for product ALPHA is $29.50, what is the proper per unit inventory price for product ALPHA?

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Answers (1)

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Hutchinson · Answer 1

Answer: $31.00

Explanation:

Given that,

Acquisition cost of product ALPHA = $34

Net realizable value for product ALPHA = $33.50

Normal profit for product ALPHA = $2.50

Market value for product ALPHA = $29.50

By applying LCM,

Per unit inventory price for product ALPHA = Net realizable value - Normal profit for product

= $33.50 - $2.50

= $31.00