Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $31; selling price, $36; selling costs, $4. What unit value should Ross use when applying the lower of cost and net realizable value rule to ending inventory?
Net realizable value = Selling Price – Selling Costs = $ 36 – $ 4 = $ 32
As cost is less than net realizable value, Ross should use the value of $ 31 per unit when computing the value of ending inventories.