Problem - Presented below is information related to Ayayai Inc.'s inventory, assuming Ayayai uses lower-of-LIFO cost-or-market.
|
(per unit)
|
Skis
|
Boots
|
Parkas
|
|
Historical cost
|
$216.60
|
$120.84
|
$60.42
|
|
Selling price
|
241.68
|
165.30
|
84.08
|
|
Cost to distribute
|
21.66
|
9.12
|
2.85
|
|
Current replacement cost
|
231.42
|
119.70
|
58.14
|
|
Normal profit margin
|
36.48
|
33.06
|
24.23
|
Determine the following:
(a) The two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis.
(b) The cost amount that should be used in the lower-of-cost-or-market comparison of boots.
(c) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-market.