Chapter 9, Problem 9.5E

Lower of cost or market

• LO9–1

[This is a variation of E 9–2, modified to focus on the lower of cost or market.] The inventory of Royal Decking consisted of five products. Information about the December 31, 2018, inventory is as follows:

Selling costs consist of a sales commission equal to 10% of selling price and shipping costs equal to 5% of cost. The normal gross profit percentage is 30% of selling price.

Required:

What unit value should Royal Decking use for each of its products when applying the lower of cost or market (LCM) rule to units of ending inventory?