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Question
Cullumber 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 $8 $16
Replacement cost 11 14
Estimated cost to dispose 2 6
Estimated selling price 18 33
In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Cullumber use for products #1 and #2, respectively?
What is the incremental costs associated with producing an extra 72,500 jars of sauce?
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