ORIE_3150_Homework__4_answers

ORIE_3150_Homework__4_answers - ORIE 3150 Homework#4 Spring...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ORIE 3150 Homework #4 Spring 2009 1. The Collins Company has five inventory items on hand. Collins has found that the items would need to be refurbished before they could be sold, and replacement costs of each of these items has changed. Collins needs to adjust the inventory cost of the items. Find the new cost for each item, and provide the journal entry needed to make the adjustment in their financial records. Item Number on hand Cost per unit Replacement Cost per unit Selling Price per unit Normal Profit per unit Refurbishing Costs per unit Foonbit 4 $50 $55 $100 $20 15 Grapple 8 100 90 120 24 20 Hook 14 80 70 85 17 20 Ibinger 8 90 37 100 20 24 Jackzoom 10 95 92 110 22 24 Answer: Recall the definitions: Net realizable value (NRV) – equals the estimated selling price in the ordinary course of business less costs of repair, preparation and disposal Net adjusted cost (NAC) – equals the NRV less a normal profit margin (NPM). NAC = NRV – NPM Replacement cost (RC) – replacement of inventory by purchase or reproduction.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern