Lexington company sells product 1976nlc for $50 per unit. the cost of one unit of 1976nlc is $45, and the replacement cost is $43. the estimated cost to dispose of a unit is $10, and the normal profit is 40%.

at what amount per unit should product 1976nlc be reported, applying lower-of-cost-or-market?
a. $20.
b. $40.
c. $43.
d. $45.

b. $40.

Explanation:

We select the lower of each of the following for reporting purposes.

Cost = $45

Replacement cost = $43

Neat realizable value = Selling price - disposal and completion costs

NRV = 50 - 10 = $40

We use lower of the values to take into account obsolete inventory or deterioration of inventory and as such the lowest of NRV is used for recording purposes.

Hope that helps.

answer; /// i believe the correct answer is ( column break);

the answer is a. $209,000