Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value. Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows: I n v e n t o r y T u r n o v e r R a t i o = C o s t o f g o o d s s o l d A v e r a g e i n v e n t o r y Note: Average inventory is calculated with the help of following formula: A v e r a g e i n v e n t o r y = ( B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y ) 2 Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows: D a y s s a l e s i n i n v e n t o r y = 365 I n v e n t o r y T u r n o v e r R a t i o Requirement-1: To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

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Answer 1

Question

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

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Spritzer Company made sales of $32,650 million in 2019. The cost of goods sold for the year totaled $13,500 million. At the end of 2018, Malt's inventory stood at $1,400 million, and Spritzer ended 2018 with an inventory of $1,800 million. Compute Malt's gross profit percentage and rate of inventory turnover for 2019.

General accounting

Felde Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2014, the company incurred the following costs. Variable Costs per Unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed Costs per Year Fixed manufacturing overhead Fixed selling and administrative expenses $ 8.25 $ 2.70 $ 6.33 $4.29 $2,58,944 $ 2,64,110 Felde Company sells the fishing lures for $27.50. During 2014, the company sold 81,200 lures and produced 95,200 lures. Assuming the company uses variable costing, calculate Felde's manufacturing cost per unit for 2014. Round answer to 2 decimal places.

Answer 2

Question

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Answer 6

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

Answer 7

Chapter 6, Problem 6SP

To determine

Introduction:

Lower of Cost or market value method: Lower of Cost or market value method is applied to find the cost of ending inventory to be recorded in the book of account. According to this method the cost is compared with the market value and inventory is recorded with the lower amount of cost or market value.

Inventory Turnover Ratio: Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

$I n v e n t o r y T u r n o v e r R a t i o = \frac{C o s t o f g o o d s s o l d}{A v e r a g e i n v e n t o r y}$

Note: Average inventory is calculated with the help of following formula:

$A v e r a g e i n v e n t o r y = \frac{(B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y)}{2}$

Day’s sales in inventory: Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated by dividing the 365 days by Inventory Turnover Ratio. The formula of the Days sales in inventory is as follows:

$D a y s s a l e s i n i n v e n t o r y = \frac{365}{I n v e n t o r y T u r n o v e r R a t i o}$

Requirement-1:

To Calculate: The lower of cost or market value of the inventory applying to inventory as a whole and need to any adjustment in inventory reporting value.

Answer 8

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

Answer 9

To determine

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

Answer 10

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

Answer 11

To determine

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

Answer 12

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Answer 13

To determine

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 6 - Prob. 1DQ Ch. 6 - 2. Where is the amount of merchandise inventory...Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - What does the full disclosure principle prescribe...Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - What is the meaning of market as it is used in...

Requirement-2: To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

Requirement-3: To Calculate: The Inventory turnover ratio and days sales in inventory

Requirement-4: To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors

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Chapter 6 Solutions

Requirement-2:

To Calculate: The lower of cost or market value of the inventory applying to each product of inventory and need to any adjustment in inventory reporting value.

Requirement-3:

To Calculate: The Inventory turnover ratio and days sales in inventory

Requirement-4:

To Determine: The performance of company by comparing the results of inventory turnover ratio and days sales in inventory with its competitors