Question

Given the acquisition cost of product Dominoe is $18, the net realizable value for product Dominoe is $16, the normal profit for product Dominoe is $1, and the market value (replacement cost) for product Dominoe is $19, what is the proper per unit inventory price for product Dominoe applying LCM? $15. $18. $19. $16.

Answer 1

Answer: $18

Step-by-step explanation:

When using the Lower of Cost or Market (LCM) method. You value inventory at either the market value or cost value. Whichever is lower.

In the above scenario, the historical/ acquisition cost of $18 < market value of $19.

Therefore we will value inventory at the historical cost of of $18.

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