Problem: Presented below is information related to Sunland Inc.'s inventory, assuming Sunland uses lower-of-LIFO cost-or-market.
|
(per unit)
|
Skis
|
Boots
|
Parkas
|
|
Historical cost
|
250.8
|
139.92
|
69.96
|
|
Selling price
|
279.84
|
191.4
|
97.35
|
|
Cost to distribute
|
25.08
|
10.56
|
3.3
|
|
Current replacement cost
|
267.96
|
138.6
|
67.32
|
|
Normal profit margin
|
42.24
|
38.28
|
28.05
|
Required: Determine the following:
1) 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.
2) The cost amount that should be used in the lower-of-cost-or-market comparison of boots.
3) The market amount that should be used to value parkas on the basis of the lower-of-cost-or-market.