Question

The inventory of Royal Decking consisted of five products. Information about the December 31, 2021, inventory is as follows: Per Unit Product Cost Replacement Cost Selling Price A $ 50 $ 45 $ 70 B 90 80 110 C 50 65 90 D 110 80 140 E 30 38 40 Selling costs consist of a sales commission equal to 15% of selling price and shipping costs equal to 5% of cost. The normal profit is 30% of selling price.

Answer 1

A $ 50

B $ 88

C $ 50

D $ 110

E $ 30

Step-by-step explanation:

Cost Selling Price Sales Cost NRV

A 50 70 14 56.0

B 90 110 22 88.0

C 50 90 18 72.0

D 110 140 28 112.0

E 30 40 8 32.0

We pick between the net realizable value and the historic cost

In all cases but B , the Cost is lower than NRV