Problem 7 Novelli\'s Nursery has developed the following data for lower of cost
ID: 2553997 • Letter: P
Question
Problem 7 Novelli's Nursery has developed the following data for lower of cost and net realizable valuation for its products Selling Price Cost Broad leaf trees: Ash Beech Needle leaf trees: Cedar $1,800 1,700 2,200 1,600 2,500 1,750 ir 3,600 3,350 Fruit trees $1,800 $1,400 Cherry The costs to sell are 10% of selling price Required: 1. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to individual trees 2. Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of trees. 3. Determine the reported inventory value assuning the lower of cost and net realizable value rule is applied to the total inventory 2,300 1,800Explanation / Answer
Selling price Cost NRV Lower of cost or NRV Broad leaf trees: Ash 1800 1700 1620 1620 Beech 2200 1600 1980 1600 Total 3300 3600 3220 Needle leaf trees: Cedar 2500 1750 2250 1750 Fir 3600 3350 3240 3240 Total 5100 5490 4990 Fruit trees: Apple 1800 1400 1620 1400 Cherry 2300 1800 2070 1800 Total 3200 3690 3200 Total overall 11600 12780 11410 1 Inventory value=$11410 2 Inventory value=3300+5100+11600= $20000 3 Inventory value=3300+5100+11600= $11600