Dybala’s Nursery uses LIFO cost flow assumption and has developed the following data for its products. The individual types of trees are separated as to their categories:

         (1) Selling Price                  (2)Cost                  (3)Cost to Replace

Broad leaf Trees:

Ash               (1)$1,800              (2)$1,000                 (3)$800

Beech            (1)2,200                 (2)1,600                   (3)1,400

Needle Leaf Trees:

Cedar             (1)2,500                (2)1,750                   (3)1,800

Fir                  (1)3,600                 (2)3,350                   (3)3,200

Fruit Trees:

Apple             (1)1,800                (2)1,400                   (3)1,300

Cherry            (1)2,300                (2)1,800                  (3)1,700

The costs to sell are 10% of the selling price, and the normal profit margin on all trees is 20% of the selling price.

1. Determine the reported inventory value assuming the lower of cost or market rule is applied to individual products?

2. Determine the reported inventory value assuming the lower of cost or market rule is applied to categories of trees?

3. Determine the reported inventory value assuming the lower of cost or market rule is applied to the total inventory?

Answer rating: 100% (QA)

Cost NRV Lower of cost or NRV Broad leaf trees Ash 1700 1620 1620 Beech 1600 1980 ... View the full answer