Reference no: EM132708846

Oriole 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                                  $9                       $17
Replacement cost                               7                           11
Estimated cost to dispose                    6                            8
Estimated selling price                         18                              29

Problem 1: In pricing its ending inventory using the lower-of-cost-or-market, what unit values, rounded to the nearest dollar, should Oriole use for products #1 and #2, respectively?

Option 1: $7 and $12.
Option 2: $11 and $12.
Option 3: $11 and $12.
Option 4: $7 and $11.