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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31, 2019, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore’s normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50. Under the lower of cost or market rule, Moore’s December 31, 2019, inventory of Product A should be valued at a unit cost of:
- a. $6.50
- b. $9.00
- c. $7.00
- d. $9.50
Calculate the unit cost of Product A at December 31, 2019.
Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting of the ending merchandise inventory in the financial statement of a company, either at current market value or at historical cost price of the inventory, whichever is less.
Calculate the unit cost of Product A at December 31, 2019.
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