Question

Cullumber Company sells product 2005WSC for $155 per unit. The cost of one unit of 2005WSC is $152, and the replacement cost is $151. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of selling price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?

Answer 1

$149 is the correct answer to the given question .

Step-by-step explanation:

As mention in the question the replacement cost of the product is $151

also the cost of disposal of product is =$6

The cost of the net realisable value i.e NRV is determined by the formula

`Net realisable value = Selling\ price \ of \ product - Cost \ of\ disposal \ of \ produt \\= $155 - $6 = $149`

Therefore the amount of per unit reported can be = to the matrix lower cost i.e equals to $149

Therefore $149 is the correct answer .