Oslo Corporation Has Two Products in Its Ending Inventory, Each

question 137

Multiple Choice

Oslo Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows: In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Oslo use for products #1 and #2, respectively?

• A) $20.00 and $32.50.
• B) $23.00 and $32.50.
• C) $23.00 and $30.00.
• D) $22.50 and $27.00.

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Definitions:

Average Cost

A method to determine the cost of goods sold and ending inventory by computing the weighted average of the costs of all goods available for sale.

Net Sales

The total revenue from sales minus returns, allowances, and discounts.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from net sales revenues, indicating the efficiency of core business operations.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, carried over from the end of the previous period.