Exhibit 9-1 Waring Inc.uses the lower of cost or market rule in valuing its inventory.One unit has a ceiling constraint of $42.50.The following is other information concerning this unit:
$\begin{array}{ll}
\text { Estimated transportation costs for delivery } & \$ 3.20 \
\text { Normal profit margin } & 5.50 \
\text { Packaging costs prior to delivery } & 2.20
\end{array}$
- Refer to Exhibit 9-1.The selling price of this unit must be

Question

Quizplus · Accepted Answer

The selling price of the unit is calculated by adding the ceiling constraint to the estimated transportation costs, normal profit margin, and packaging costs prior to delivery: $42.50 + $3.20 + $5.50 + $2.20 = $53.40.

Exhibit 9-1 Waring Inc - Refer to Exhibit 9-1