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Chapter 9: Question 3E (page 476)

Sedato Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Estimated Selling Price Cost to Complete and Sell 1320 1,200 \(3.20 \)4.50 $1.60 1333 900 2.70 3.40 1.00 1426 800 4.50 5.00 1.40 1437 1,000 3.60 3.20 1.35 1510 700 2.25 3.25 1.40 1522 500 3.00 3.90 0.80 1573 3,000 1.80 2.50 1.20 1626 1,000 4.70 6.00 1.50 Instructions From the information above, determine the amount of Sedato Company inventory

Short Answer

Expert verified

Sedato Company inventory equals $20,465.

Step by step solution

01

Calculation of total cost per item

The total cost per unit is calculated as follows:

Item No.

Quantity

Cost per unit

Total cost

1320

1,200

$3.20

$3,840

1333

900

2.70

2,430

1426

800

4.50

3,600

1437

1,000

3.60

3,600

1510

700

2.25

1,575

1522

500

3.00

1,500

1573

3,000

1.80

5,400

1626

1,000

4.70

4,700

02

Calculation of net realized value

Net realizable value per item is calculated as follows:

Item No.

Quantity

Estimated selling price

Cost to complete and sell

Net realizable value per unit

Total net realizable value

1320

1,200

$4.50

$1.60

$2.90

$3,480

1333

900

3.40

1.00

2.40

2,160

1426

800

5.00

1.40

3.60

2,880

1437

1,000

3.20

1.35

1.85

1,850

1510

700

3.25

1.40

1.85

1,295

1522

500

3.90

0.80

3.10

400

1573

3,000

2.50

1.20

1.30

3,900

1626

1,000

6.00

1.50

4.50

4,500

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Most popular questions from this chapter

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Question:Why are inventories valued at the lower-of-cost-or-net realizable value (LCNRV)? What are the arguments against the use of the LCNRV method of valuing inventories?

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