INTERMEDIATE ACCOUNTING
10th Edition
ISBN: 9781265246853
Author: SPICELAND
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 9.4BE
Lower of cost or market
• LO9–1
[This is a variation of BE 9–2, modified to focus on the lower of cost or market.] SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:
| Product 1 | Product 2 | |
| Cost | $50 | $34 |
| Replacement cost | 48 | 26 |
| Selling price | 70 | 36 |
| Selling costs | 6 | 4 |
| Normal profit margin | 10 | 8 |
Determine the carrying value of SLR’s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment?
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O d. None of the given answers
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O a.
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AGE
ENG G 1)
614
PROBLEM 8. The Color Company manufactures and sells two
products. The selling prices and variable costs of the products
are as follows:
Blujets
Blupens
Selling prices
Variable costs
P20
P40
8
24
The sales for 2021 were in the ratio of 3 Blujets to 1 Blupen.
Sales volume for 2021 was P1 million. Fixed costs for 2020
amounted to P390,000.
Requirements:
1. Compute the number of units sold in 2021 for each
product.
2. Compute the breakeven sales in pesos and in units.
3. Compute the composite breakeven for the company.
PROBLEM 8. The Color Company manufactures and sells two
products. The selling prices and variable costs of the products
are as follows:
Blujets Blupens
P20
Selling prices
Variable costs
P40
8
24
The sales for 2021 were in the ratio of 3 Blujets to 1 Blupen.
Sales volume for 2021 was P1 million. Fixed costs for 2020
amounted to P390,000.
Requirements:
4. If the sales mix was to change to 2 units of blujets to 1 unit
of Blupen, would this have any effect on the breakeven
sales? If so, what would be the new breakeven sales?
5. Assuming that the sales volume would remain at P1
million, what net income would be generated using the
sales mix in number (4) above?
6. What sales revenue would be required if the firm wishes to
generate a net income of P328,900 if the original mix of 3:1
prevailed?
Chapter 9 Solutions
INTERMEDIATE ACCOUNTING
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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