Given the acquisition cost of product Dominoe is $30, the net realizable value for product Dominoe is $28, the normal profit for product Dominoe is $1, and the market value (replacement cost) for product Dominoe is $31, what is the proper per unit inventory price for product Dominoe applying LCM

Question

Business

Jocelyn Sanders

10 January, 20:15

Given the acquisition cost of product Dominoe is $30, the net realizable value for product Dominoe is $28, the normal profit for product Dominoe is $1, and the market value (replacement cost) for product Dominoe is $31, what is the proper per unit inventory price for product Dominoe applying LCM

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Answers (1)

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Essence Russell · Answer 1

The appropriate per unit price is $28

Explanation:

The proper inventory per unit inventory price for product Dominoe applying the lower of cost or market price is the lowest of the net realizable value of $28, the initial cost of $30 as well as the replacement cost of $31 per unit.

Since the net realizable value of $28 is lower than the replacement cost of $31 and the cost of $30, the per unit inventory of product Dominoe would be valued at $28 per unit with respect to lower of cost and market price