Please answer the following Sandals Company is preparing the annual financial st
ID: 2412309 • Letter: P
Question
Please answer the following
Explanation / Answer
Answers
Unit Cost
Market Value
Lower of Cost or MV
Units
Ending Inventory Valued at
[A]
[B]
[C = lower of ‘A’ or ‘B’]
[D]
[E = C x D]
Air Flow
$ 13.00
$ 15.00
$ 13.00
25
$ 325.00
Blister Buster
$ 38.00
$ 36.00
$ 36.00
80
$ 2,880.00
Coolonite
$ 60.00
$ 55.00
$ 55.00
34
$ 1,870.00
Dudesly
$ 28.00
$ 33.00
$ 28.00
15
$ 420.00
TOTAL
154
$ 5,495.00
Answer: Ending Inventory = $ 5,495.00 as per LCM Rule
FIFO Cost
Units
Inventory at cost
Air Flow
$ 13.00
25
$ 325.00
Blister Buster
$ 38.00
80
$ 3,040.00
Coolonite
$ 60.00
34
$ 2,040.00
Dudesly
$ 28.00
15
$ 420.00
TOTAL cost of ending inventory as per FIFO
154
$ 5,825.00
Total cost of ending inventory as per LCM rule
154
$ 5,495.00
Decrease in Inventory Value
$ 330.00
Answer: Inventory cost is getting decreased by $ 330
Hence, The Cost of Goods Sold will be INCREASED by $ 330
Unit Cost
Market Value
Lower of Cost or MV
Units
Ending Inventory Valued at
[A]
[B]
[C = lower of ‘A’ or ‘B’]
[D]
[E = C x D]
Air Flow
$ 13.00
$ 15.00
$ 13.00
25
$ 325.00
Blister Buster
$ 38.00
$ 36.00
$ 36.00
80
$ 2,880.00
Coolonite
$ 60.00
$ 55.00
$ 55.00
34
$ 1,870.00
Dudesly
$ 28.00
$ 33.00
$ 28.00
15
$ 420.00
TOTAL
154
$ 5,495.00