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16 January, 08:31

Given the acquisition cost of product ALPHA is $34, the net realizable value for product ALPHA is $33.50, the normal profit for product ALPHA is $2.50, and the market value (replacement cost) for product ALPHA is $29.50, what is the proper per unit inventory price for product ALPHA?

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  1. 16 January, 11:21
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    Answer: $31.00

    Explanation:

    Given that,

    Acquisition cost of product ALPHA = $34

    Net realizable value for product ALPHA = $33.50

    Normal profit for product ALPHA = $2.50

    Market value for product ALPHA = $29.50

    By applying LCM,

    Per unit inventory price for product ALPHA = Net realizable value - Normal profit for product

    = $33.50 - $2.50

    = $31.00
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