Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $26; selling price, $36; selling costs, $4. What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inventory

The unit value os $20 which Ross should use

Explanation:

LCM stand for or termed as Lower of Cost or Market approach- This approach is described as the inventory values at the historical cost or lesser than the replacement cost of market.

NRV stands for or termed as Net Realizable Value- This rule or method is defined as the estimated selling price, which the company expects to gather in the cash form from the customer through the sale of the inventory.

Computing the unit value as:

Given,

Cost price per unit is $20

Selling price per unit is $30

Selling cost per unit is $4

Using the NRV method:

NRV = Selling Price - Selling Cost

= $30 - $4

= $26

Using the lower of cost rule:

Cost = Cost of product

Cost = $20

Therefore, the $20 is the unit value which Rose should use.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: