1.

Oslo Corporation has two products in its ending inventory, each accounted for at the lower of cost or
market. A profit margin of 30% on selling price is considered normal for each product. Specific data with
respect to each product follows:
Product #1 Product #2
Historical cost P20.00 P 35.00
Replacement cost 22.50 27.00
Estimated cost to dispose 5.00 13.00
Estimated selling price 40.00 65.00
In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Oslo use for
products #1 and #2, respectively?
a. P20.00 and P32.50.
b. P23.00 and P32.50.
c. P23.00 and P30.00.
d. P22.50 and P27.00.

2. Muckenthaler Company sells product 2005WSC for P30 per unit. The cost of one unit of 2005WSC is
P27, and the replacement cost is P26. The estimated cost to dispose of a unit is P6, and the normal
profit is 40%. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-
market?
a. P12.
b. P24.
c. P26.
d. P27.

3. Lexington Company sells product 1976NLC for P50 per unit. The cost of one unit of 1976NLC is P45,
and the replacement cost is P43. The estimated cost to dispose of a unit is P10, and the normal profit is
40%. At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market?
a. P20.
b. P40.
c. P43.
d. P45.

4. Given the acquisition cost of product Z is P64, the net realizable value for product Z is P58, the normal
profit for product Z is P5, and the market value (replacement cost) for product Z is P60, what is the
proper per unit inventory price for product Z?
a. P64.
b. P60.
c. P53.
d. P58.

5. Given the acquisition cost of product ALPHA is P17, the net realizable value for product ALPHA is
P16.70, the normal profit for product ALPHA is P1.24, and the market value (replacement cost) for
product ALPHA is P14.72, what is the proper per unit inventory price for product ALPHA?
a. P17.00.
b. P15.46
c. P14.72.
d. P16.70.

6. Given the acquisition cost of product Dominoe is P43.31, the net realizable value for product Dominoe
is P38.49, the normal profit for product Dominoe is P4.32, and the market value (replacement cost) for
product Dominoe is P40.68, what is the proper
per unit inventory price for product Dominoe?
a. P40.68.
b. P34.18.
c. P38.49.
d. P43.31

7. Mortenson Corporation sells its product, a rare metal, in a controlled market with a quoted price
applicable to all quantities. The total cost of 5,000 pounds of the metal now held in inventory is
P150,000. The total selling price is P360,000, and estimated costs of disposal are P10,000. At what
amount should the inventory of 5,000 pounds be reported in the balance sheet?
a. P140,000.
b. P150,000.
c. P350,000.
d. P360,000.
 8. Rodriguez Corporation sells its product, a rare metal, in a controlled market with a quoted price
applicable to all quantities. The total cost of 5,000 pounds of the metal now held in inventory is
P210,000. The total selling price is P490,000, and estimated costs of disposal are P5,000. At what
amount should the inventory of 5,000 pounds be reported in the balance sheet?
a. P205,000.
b. P210,000.
c. P485,000.
d. P490,000.

9. Turner Corporation acquired two inventory items at a lump-sum cost of P80,000. The acquisition
included 3,000 units of product LF, and 7,000 units of product 1B. LF normally sells for P24 per unit,
and 1B for P8 per unit. If Turner sells 1,000 units of LF, what amount of gross profit should it
recognize?
a. P3,000
b. P9,000.
c. P16,000.
d. P19,000.

10. Robertson Corporation acquired two inventory items at a lump-sum cost of P60,000. The acquisition
included 3,000 units of product CF, and 7,000 units of product 3B. CF normally sells for P18 per unit,
and 3B for P6 per unit. If Robertson sells 1,000 units of CF, what amount of gross profit should it
recognize?
a. P2,250.
b. P6,750.
c. P12,000.
d. P14,250.

11. Chess Top uses the periodic inventory system. For the current month, the beginning inventory
consisted of 300 units that cost P65 each. During the month, the company made two purchases: 450
units at P68 each and 225 units at P70 each. Chess Top also sold 750 units during the month. Using
the average cost method, what is the amount of ending inventory?
a. P15,750.
b. P50,655.
c. P50,100.
d. P15,197.

12. Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted
of 2,400 units that cost P12 each. During the month, the company made two purchases: 1,000 units at
P13 each and 4,000 units at P13.50 each. Checkers also sold 4,300 units during the month. Using the
FIFO method, what is the ending inventory?
a. P40,146.
b. P37,200.
c. P41,850.
d. P37,900.

Transactions for the month of June were:

Purchases Sales
June 1 (balance) 1,200 @ P3.20 June 2 900 @ P5.50
3 3,300 @ 3.10 6 2,400 @ 5.50
7 1,800 @ 3.30 9 1,500 @ 5.50
15 2,700 @ 3.40 10 600 @ 6.00
22 750 @ 3.50 18 2,100 @ 6.00
25 300 @ 6.00
13. Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is
a. P6,165.
b. P6,240.
c. P6,435.
d. P6,705.

14. Assuming that perpetual inventory records are kept in units only, the ending inventory on an average-
cost basis, rounded to the nearest dollar, is
a. P6,144.
b. P6,357.
c. P6,435.
d. P6,483.