Cramer Corporation has two products in its ending inventory and uses lower of cost or market to account for each.Cramer normally prices its products to maintain a 30% gross profit margin.Specific data for each product follows:B.The replacement cost of $92 is between the ceiling ($148)and floor ($88)and is higher than historical cost.
$\begin{array}{lccc}
& \text { Product A } & & \text { Product B } \
\text { Historical cost }& \$ 34 & & \$ 90 \
\text { Replacement cost } & 30 & & 92 \
\text { Estimated cost to dispose } & 10 & & 52 \
\text { Estimated selling price } & 60 & & 200
\end{array}$
Required:
Using the lower of cost or market rule,what unit values should Cramer use to cost Products A and B in its ending inventory?

Question

Cramer Corporation has two products in its ending inventory and uses lower of cost or market to account for each.Cramer normally prices its products to maintain a 30% gross profit margin.Specific data for each product follows:B.The replacement cost of $92 is between the ceiling ($148)and floor ($88)and is higher than historical cost.
$\begin{array}{lccc} 
& \text { Product A } & & \text { Product B } \
\text { Historical cost }& \$ 34 & & \$ 90 \
\text { Replacement cost } & 30 & & 92 \
\text { Estimated cost to dispose } & 10 & & 52 \
\text { Estimated selling price } & 60 & & 200
\end{array}$ 
Required:
Using the lower of cost or market rule,what unit values should Cramer use to cost Products A and B in its ending inventory?

Quizplus · Accepted Answer

The Answer of Cramer Corporation has two products in its ending inventory and uses lower of cost or market to account for each.Cramer normally prices its products to maintain a 30% gross profit margin.Specific data for each product follows:B.The replacement cost of $92 is between the ceiling ($148)and floor ($88)and is higher than historical cost.
$\begin{array}{lccc} 
& \text { Product A } & & \text { Product B } \
\text { Historical cost }& \$ 34 & & \$ 90 \
\text { Replacement cost } & 30 & & 92 \
\text { Estimated cost to dispose } & 10 & & 52 \
\text { Estimated selling price } & 60 & & 200
\end{array}$ 
Required:
Using the lower of cost or market rule,what unit values should Cramer use to cost Products A and B in its ending inventory?

Cramer Corporation Has Two Products in Its Ending Inventory and Uses