1. Use LCM applied separately to the following individual items to compute ending inventory…

1. Use LCM applied separately to the following individual items to compute ending inventory

Product                                Units                                     Unit Recorded Cost                         Unit Market Cost

A . . . . . . . . . . .                   20                                                           $ 6                                          $ 5

B . . . . . . . . . . .                   40                                                           9                                             8

C . . . . . . . . . .                      10                                                           12                                           15

2. Why are incidental costs sometimes ignored in inventory costing? Under what accounting constraint is this permitted?

3. If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of goods sold? Why?

 

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