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27 October, 00:20

Given the acquisition cost of product Z is $64, the net realizable value for product Z is $58, the normal profit for product Z is $5, and the market value (replacement cost) for product Z is $60, what is the proper per unit inventory price for product Z?

a. $64.

b. $60.

c. $53.

d. $58.

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Answers (1)
  1. 27 October, 00:36
    0
    option (d) $58

    Explanation:

    Data provided in the question:

    Acquisition cost of product Z = $64

    Net realizable value for product Z = $58

    Normal profit for product Z = $5

    Market value (replacement cost) for product Z = $60

    Now,

    Floor Net realizable value = Net realizable value - Normal profit

    = $58 - $5

    = $53

    Proper per unit inventory price for product Z

    = lower of [ cost, net reliable value ]

    = lower of [ $64, $58 ]

    = $58

    Hence,

    The answer is option (d) $58
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