I don't understand exactly what they're asking. I know that the number of days sales In inventory is the average inventory divided by the avg daily cost of merchandise sold. You compute the average inventory by dividing the sum of the end of the year and the beginning of the year divided by two. In order to find the daily cost of merchandise sold you must take the cost of the merchandise and divide that by 365. As for the inventory turnover you calculate that by the cost of merchandise sold by the average inventory. Maybe I just cant grasp the exhibit because I know how to calculate it all I just don't understand it. Lower-of-Cost-or-Market MethodOn the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to eachinventory item, as shown in Exhibit 10.Market Value per UnitItem Inventory QuantityCost per Unit (Net Realizable Value)JFW183$55$60SAW91762723 Exhibit 10Determining Inventory at Lower of Cost or Market (LCM)Market ValueLower ofper Unit(Net Realizable Value)Inventory Cost perCost or MarketItemQuantityUnitCostMarket(LCM)$ 3,8002,892Echo400$10.25$ 9.50$ 4,100$ 3,800(1)AppliedIndividual ItemFoxtrot12022.5024.102,7002,700Sierra6008.007.754,8004,6504,650Tango28014.0014.753,9204,1303,920$15,070by ItemTotal$15,520 $15,472Class 1:$ 9.50$ 3,800$ 4,1002,700$ 6,800Echo400$10.25Foxtrot12022.5024.102,892Subtotal$ 6,692$ 6,692(2)Applied Classby ClassClass 2:Sierra6008.007.75$ 4,800$ 4,650Tango28014.0014.753,920$ 8,720$15,5204,130$ 8,780$15,472Subtotal8,720$15,412Total$ 3,8002,892$ 9.50$ 4,1002,700Echo400$10.25(3)Appled inTotalFoxtrot12022.5024.10Sierra6008.007.754,8004,650TangoTotal4,130$15,47228014.0014.753,920$15,520$15,472

Inventory value is calculated as the total cost of your inventory at the end of each accounting…

Answered: I know that the number of days sales In…

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 7DQ: Using the following data, how should the inventory be valued under lower of cost or market? Original...

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I don't understand exactly what they're asking. I know that the number of days sales In inventory is the average inventory divided by the avg daily cost of merchandise sold. You compute the average inventory by dividing the sum of the end of the year and the beginning of the year divided by two. In order to find the daily cost of merchandise sold you must take the cost of the merchandise and divide that by 365. As for the inventory turnover you calculate that by the cost of merchandise sold by the average inventory. Maybe I just cant grasp the exhibit because I know how to calculate it all I just don't understand it.

Lower-of-Cost-or-Market Method
On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each
inventory item, as shown in Exhibit 10.
Market Value per Unit
Item Inventory Quantity
Cost per Unit (Net Realizable Value)
JFW1
83
$55
$60
SAW9
176
27
23

Exhibit 10
Determining Inventory at Lower of Cost or Market (LCM)
Market Value
Lower of
per Unit
(Net Realizable Value)
Inventory Cost per
Cost or Market
Item
Quantity
Unit
Cost
Market
(LCM)
$ 3,800
2,892
Echo
400
$10.25
$ 9.50
$ 4,100
$ 3,800
(1)
Applied
Individual Item
Foxtrot
120
22.50
24.10
2,700
2,700
Sierra
600
8.00
7.75
4,800
4,650
4,650
Tango
280
14.00
14.75
3,920
4,130
3,920
$15,070
by Item
Total
$15,520 $15,472
Class 1:
$ 9.50
$ 3,800
$ 4,100
2,700
$ 6,800
Echo
400
$10.25
Foxtrot
120
22.50
24.10
2,892
Subtotal
$ 6,692
$ 6,692
(2)
Applied Class
by Class
Class 2:
Sierra
600
8.00
7.75
$ 4,800
$ 4,650
Tango
280
14.00
14.75
3,920
$ 8,720
$15,520
4,130
$ 8,780
$15,472
Subtotal
8,720
$15,412
Total
$ 3,800
2,892
$ 9.50
$ 4,100
2,700
Echo
400
$10.25
(3)
Appled in
Total
Foxtrot
120
22.50
24.10
Sierra
600
8.00
7.75
4,800
4,650
Tango
Total
4,130
$15,472
280
14.00
14.75
3,920
$15,520
$15,472

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