Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 1MC
Sienna Company uses the FIFO cost flow assumption. Sierra has inventory with a selling price of $100, packaging costs of $5, and transportation costs of $10. Sienna’s normal profit margin is $20. However, due to limited supply of the product from the manufacturer, it would cost Sienna $80 to replace the inventory. What amount should be used as the market value?
- a. $65
- b. $80
- c. $85
- d. $100
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Company A calculates the cost per unit of its product at $ 28 (with $ 18 variable cost & $
10 fixed cost). The product sells for $ 42. If then there is a large trader who intends to buy
5000 units but at a price of $ 25 with an additional shipping cost of $ 1, then should
Company A accept the order (Assume that the order does not interfere with regular
orders)? what is the increase/decrease in net profit of company A?
O $125.000
O $140,000
O $95.000
O $30,000
Dhofar Company has the following information:
Total Fixed cost OMR 8000
Selling price per unit OMR 20
Variable cost per unit OMR 12,
What will be the correct amount of Profit when 2500 Units have been sold?
Select one:
a. OMR 12000
b. None of the options
c. OMR 10000
d. OMR 20000
2)
Power Company's income statement for 2021 is given below. If inventory balances are 5000 in 2021 and 9000 in 2020, and if accounts payables balances are 7000 in 2021 and 12000 in 2020. Which of the following is cash payments for COGS (cash inputs)?
Sales
75,000
-COGS
55,000
Gross Profit
20,000
-Operating Expenses
8,000
Operating Profit
12,000
-Interest Expense
2,000
Profit before Tax
10,000
-Tax
3,000
Net Profit
7,000
Select one:
a. 54000
b. 56000
c. 59000
d. 63000
Assume in each case that the selling expenses are $9 per unit and that the normal profit is $6 per unit. Calculate the limits for each case. Then enter the amount that should be used for lower of cost or market.
Selling Price
Upper Limit
Replacement Cost
Lower Limit
Cost
LCM
(a)
$63
$
$44
$
$53
$
(b)
52
35
39
(c)
59
44
45
(d)
54
38
36
Chapter 8 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 8 - Under what circumstances will a company value...Ch. 8 - What is the conceptual justification for reducing...Ch. 8 - Define the terms cost, net realizable value, and...Ch. 8 - For companies that use either LIFO or the retail...Ch. 8 - What three implementation approaches may a company...Ch. 8 - Describe the two approaches to recording the...Ch. 8 - Prob. 7GICh. 8 - In applying the inventory valuation rules to...Ch. 8 - Prob. 9GICh. 8 - What are the exceptions to historical cost...
Ch. 8 - Prob. 11GICh. 8 - Prob. 12GICh. 8 - What is the basic assumption underlying the gross...Ch. 8 - Prob. 14GICh. 8 - Prob. 15GICh. 8 - Explain the meaning of the following terms:...Ch. 8 - Prob. 17GICh. 8 - Prob. 18GICh. 8 - The retail inventory method indicated an inventory...Ch. 8 - Prob. 20GICh. 8 - Indicate the effect of each of the following...Ch. 8 - Sienna Company uses the FIFO cost flow assumption....Ch. 8 - Moore Company uses the LIFO cost flow assumption...Ch. 8 - A company uses the LIFO cost flow assumption. The...Ch. 8 - Prob. 4MCCh. 8 - Hestor Companys records indicate the following...Ch. 8 - Under the retail inventory method, freight-in...Ch. 8 - The retail inventory method would include which of...Ch. 8 - At December 31, 2019, the following information...Ch. 8 - Estimates of price-level changes for specific...Ch. 8 - A company forgets to record a purchase on credit...Ch. 8 - Brown Company has the following information...Ch. 8 - Black Corporation uses the LIFO cost flow...Ch. 8 - Blue Corporation uses the FIFO cost flow...Ch. 8 - Paul Corporation uses FIFO and reports the...Ch. 8 - Using the information provided in RE8-4, prepare...Ch. 8 - Kays Beauty Supply uses the gross profit method to...Ch. 8 - Uncle Butchs Hunting Supply Shop reports the...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Use the information in RE8-7. Calculate Uncle...Ch. 8 - Johnson Corporation had beginning inventory of...Ch. 8 - Borys Companys periodic inventory at December 31,...Ch. 8 - Refer to the information provided in RE8-4. If...Ch. 8 - Refer to the information provided in RE8-4. If...Ch. 8 - Inventory Write-Down Stiles Corporation uses the...Ch. 8 - Inventory Write-Down Stiles Corporation uses the...Ch. 8 - Inventory Write-Down Byron Company has five...Ch. 8 - Inventory Write-Down The following information for...Ch. 8 - Inventory Write-Down The following information is...Ch. 8 - Inventory Write-Down The inventories of Berry...Ch. 8 - Prob. 7ECh. 8 - Gross Profit Method: Estimation of Flood Loss On...Ch. 8 - Prob. 9ECh. 8 - Gross Profit Method: Estimation of Theft Loss You...Ch. 8 - Retail Inventory Method Harmes Company is a...Ch. 8 - Retail Inventory Method The following data were...Ch. 8 - Retail Inventory Method The following information...Ch. 8 - Dollar-Value LIFO Retail Johns Company adopts the...Ch. 8 - Dollar-Value LIFO Retail Wyatt Company adopts the...Ch. 8 - Dollar-Value LIFO Retail On December 31, 2018,...Ch. 8 - Errors A company that uses the periodic inventory...Ch. 8 - Errors During the course of your examination of...Ch. 8 - (Appendix 8.1) Inventory Write-Down The...Ch. 8 - Inventory Write-Down Palmquist Company has five...Ch. 8 - Inventory Write-Down The following are the...Ch. 8 - Inventory Write-Down The inventory records of...Ch. 8 - Gross Profit Method: Estimation of Fire Loss On...Ch. 8 - Gross Profit Method: Estimation of Flood Loss On...Ch. 8 - Retail Inventory Method Turner Corporation uses...Ch. 8 - Retail Inventory Method EKC Company uses the...Ch. 8 - Retail Inventory Method Red Department Store uses...Ch. 8 - Retail Inventory Method Weber Corporation uses the...Ch. 8 - Dollar-Value LIFO Retail The following information...Ch. 8 - Dollar-Value LIFO Retail Intella Inc. adopted the...Ch. 8 - Prob. 12PCh. 8 - Errors As controller of Lerner Company, which uses...Ch. 8 - Comprehensive: Inventory Adjustments Layne...Ch. 8 - (Appendix 8.1) Inventory Write-Down The following...Ch. 8 - (Appendix 8.1) Inventory Write-Down Frost Companys...Ch. 8 - Prob. 1CCh. 8 - Sandberg Paint Company, your client, manufactures...Ch. 8 - Prob. 3CCh. 8 - Inventory Valuation Issues Hanlon Company...Ch. 8 - Gross Profit Shelly Corporation is an importer and...Ch. 8 - Prob. 6CCh. 8 - Prob. 7CCh. 8 - Various Inventory Issues Hudson Company, which is...Ch. 8 - Analyzing Starbucks Inventory Disclosures Obtain...Ch. 8 - Analyzing Moet Hennessy Louis Vuittons (LVMH)...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Given the historical cost of product Dominoe is $37, the selling price of product Dominoe is $40, costs to sell product Dominoe are $2, the replacement cost for product Dominoe is $36, and the normal profit margin is 20% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method?arrow_forwardA product is currently reported on the balance sheet at a cost of $29. The selling price of the product is currently $30 and disposal costs are $3. If the company had to buy the product today, it would pay $28. The product has a normal profit margin on sales of 30%. What amount should the product be valued at under each of the following methods? Lower of Cost or Market (LCM) Lower of Cost of Net Realizable Value (LCNRV)arrow_forwardBlack Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of 300, a normal profit margin of 35, and a current replacement cost of 250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Blacks ending inventory.arrow_forward
- If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than $12. D. None of these statements can be verified.arrow_forwardWhen prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)arrow_forwardWhen prices are falling (deflation), which costing method would produce the highest gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or weighted average, assuming that B62 Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming B62 sold just one unit of these goods for $400. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)arrow_forward
- 5. A merchant buys a particular product at P 20 per unit and sells them at P 35 per unit. His fixed cost is P 200. Due to stiff competition, the sale of the product began to decline. The selling price decreased by 2% of the units sold. The variable and fixed cost remains constant. a. Represent the new selling price. b. Determine the TR, TC, and Profit function. c. Find the BEP quantity revenue. d. What is the profit at a sale volume of 100 units?arrow_forwardSame question as above but need help with the following questions please a-2. From an operating profit (loss) perspective for March, should Miles Audio accept the order from Lanoo Custom Systems? b. What is the minimum price Miles Audio should accept to take the special order from Lanoo Custom Systems?arrow_forwardSuppose the relevant carrying cost per unit per year was $20 and the relevant ordering cost per purchase order was $200. Suppose further that Alpha calculates EOQ after incorrectly estimating relevant carrying cost per unit per year to be $10 and relevant ordering cost per purchase order to be $400. Calculate the actual annual relevant total costs of Alpha’s EOQ decision. Compare this cost to the annual relevant total costs that Alpha would have incurred if it had correctly estimated the relevant carrying cost per unit per year of $20 and the relevant ordering cost per purchase order of $200 Calculate and comment on the cost of the prediction error.arrow_forward
- If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)for $15, purchase 3 (latest) for $12, which of the following statements is true?A. This is an inflationary cost pattern.B. This is a deflationary cost pattern.C. The next purchase will cost less than $12.D. None of these statements can be verifiedarrow_forwardSalalah Company has the following information: Total Fixed cost OMR 20000 Selling price per unit OMR 25 Variable cost per unit OMR 15 What will be the amount of sales if it is desired to earn a profit of OMR 5000? Select one: a. OMR 62500 b. None of the options c. Units 2500 d. OMR 43750arrow_forwardWhen prices are falling (deflation), which costing method would produce the highest gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or weighted average, if ABC Company had the following transactions for the month. Purchase Purchase Purchase A. B. C. Number of Units 10 20 10 40 Calculate the gross margin for each of the following cost allocation methods, assuming ABC Company sold just one unit of these goods for $400. Provide your calculations. Cost per Unit $200 205 230 first-in, first-out (FIFO) last-in, first-out (LIFO) weighted average (AVG)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License