Question

Wilson Animal Feeds has developed the following data to calculate lower of cost or market for its products.

Large animals:
Cattle $320 $160
Horse 400 400
Small animals:
Cat $360 $320
Dog 120 90
Exotic pets:
Ferret $140 $112
Iguana 70 48

The costs to sell are 20% of selling price.

Required:
Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of feeds.

Answer 1

The total reported inventory value is $1,130.

Step-by-step explanation:

Note: The data given the question are sorted and presented properly as follows:

Selling Price Cost

Large animals:

Cattle $320 $160

Horse 400 400

Small animals:

Cat $360 $320

Dog 120 90

Exotic pets:

Ferret $140 $112

Iguana 70 48

Based on the lower of cost and net realizable value rule, we select the lower and determine the reported inventory value as follows:

Details Value ($)

Large animals:

Cattle 160

Horse 400

Small animals:

Cat 320

Dog 90

Exotic pets:

Ferret 112

Iguana 48

Total value 1,130

Therefore, the total reported inventory value is $1,130.