Question - Presented below is information related to Monty Inc.'s inventory, assuming Monty uses lower-of-LIFO cost-or-market.
|
(per unit)
|
Skis
|
Boots
|
Parkas
|
|
Historical cost
|
$269.80
|
$150.52
|
$75.26
|
|
Selling price
|
301.04
|
205.90
|
104.73
|
|
Cost to distribute
|
26.98
|
11.36
|
3.55
|
|
Current replacement cost
|
288.26
|
149.10
|
72.42
|
|
Normal profit margin
|
45.44
|
41.18
|
30.18
|
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.