A Company Has the Following Per Unit Original Costs and Replacement

question 146

Multiple Choice

A company has the following per unit original costs and replacement costs for its inventory: Part A: 50 units with a cost of $5 and replacement cost of $4.50.
Part B: 75 units with a cost of $6 and replacement cost of $6.50.
Part C: 160 units with a cost of $3 and replacement cost of $2.50.
Under the lower of cost or market method,the total value of this company's ending inventory must be reported as:

• A)$1,180.00.
• B)$1,075.00.
• C)$1,112.50 or $1075.00,depending upon whether LCM is applied to individual items or the inventory as a whole.
• D)$1,112.50.
• E)$1180.00 or $1075.00,depending upon whether LCM is applied to individual items or to the inventory as a whole.

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Definitions:

Product Costs

Costs that are directly associated with the manufacturing of products, including direct materials, direct labor, and manufacturing overhead.

Financial Statements

Reports that summarize the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Managerial Accounting

A branch of accounting focused on providing financial information within a company to assist in decision-making, planning, and control.

Decision Makers

Individuals or entities that have the authority to make choices or form policies within organizations, significantly impacting its direction and operations.