Description: During` the first 18 months of the pandemic, demand for lumber skyrocketed, driving prices through the roof. Now prices are coming back to reality and those who delayed their projects are smiling. Two-by-fours were at $12.65 on June 1. Now you can pick one up for $3.95, essentially a pre-Covid value.
Date: September 15, 2021
1)Have you or your classmates been aware of the big rise in lumber costs during Covid times?
2) If you were an accountant for a building contractor, what strategies would you advise management to utilize to manage the risk of rising material prices during the Covid crisis?
3) Pages 6-20 to 6-22 of Wiley’s Financial Accounting: Tools for Business Decision Making discuss the concept of lower of cost and net realizable value. How might the change in lumber prices and this concept impact the financial statements of building supply retailers ?