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The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 200, Replacement cost 170, Selling price 190, Disposal costs 10, Normal profit margin 30. Using the lower of cost or market method, this item should be valued at:_______.A. $150.
B. $200.
C. $170.
D. $190.

Respuesta :

Answer:

correct option is C. $170

Explanation:

given data

Per unit Cost = $200

Replacement cost = 170

Selling price = 190

Disposal costs = 10

Normal profit margin = 30

solution

we get here Lower of cost or market  method that is express as

Lower of Per unit Cost or Replacement cost or  Selling price - (profit margin -Disposal costs  ) ......................1

take value here

Lower of $200 or $170 or  ( $190 - ( $30 - $10 ) )

so here  Lower of $200 or $170 or $170

so lower is $170

so correct option is C. $170

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