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Problem 6-4A (Algo) Report inventory using lower of cost and net realizable value (LO6-6)

A local Chevrolet dealership carries the following types of vehicles:
Inventory Items Quantity Unit Cost Unit NRV
Vans 3 $22,000 $20,000
Trucks 6 17,000 16,000
2-door sedans 2 12,000 14,000
4-door sedans 7 16,000 19,000
Sports cars 3 32,000 35,000
SUVs 5 28,000 23,000
Because of recent increases in gasoline prices, the car dealership has noticed a reduced demand for its SUVs, vans, and trucks.


Required:

Compute the total cost of the entire inventory.

User Dan Korn
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1 Answer

4 votes

Final answer:

The total cost of the entire inventory is $540,000.

Step-by-step explanation:

To compute the total cost of the entire inventory, we need to multiply the quantity of each type of vehicle by its unit cost and then sum up the results.

For vans: 3 * $22,000 = $66,000

For trucks: 6 * $17,000 = $102,000

For 2-door sedans: 2 * $12,000 = $24,000

For 4-door sedans: 7 * $16,000 = $112,000

For sports cars: 3 * $32,000 = $96,000

For SUVs: 5 * $28,000 = $140,000

Summing up the costs, the total cost of the entire inventory is $540,000.

User Maritim
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