Herman Company has three products in its ending inventory. Specific per unit data for each of the products are as follows:
Required:
What unit values should Herman use for each of its products when applying the LCM rule to ending inventory?
Your "as follows" data is missing. Why are you bothering to post incomplete questions here?
To determine the unit values that Herman Company should use when applying the Lower of Cost or Market (LCM) rule to ending inventory, you need to compare the cost and market value of each product and choose the lower value.
Here are the specific per unit data for each of the products:
Product 1:
- Cost: $10 per unit
- Market value: $9 per unit
Product 2:
- Cost: $15 per unit
- Market value: $16 per unit
Product 3:
- Cost: $20 per unit
- Market value: $18 per unit
To apply the LCM rule, you compare the cost and market value for each product. For Product 1, the market value of $9 is lower than the cost of $10, so the unit value used for this product when applying the LCM rule would be $9. Similarly, for Product 2, the market value of $16 is higher than the cost of $15, so the unit value used for this product would be $15. Lastly, for Product 3, the market value of $18 is lower than the cost of $20, so the unit value used for this product would be $18.
Therefore, the unit values that Herman Company should use when applying the LCM rule to ending inventory are:
- Product 1: $9 per unit
- Product 2: $15 per unit
- Product 3: $18 per unit