Question

Q 6.20: The Daily Grind sells coffee makers. Its inventory of coffee makers without timers cost $20,000 and is now valued at $10,000. Its inventory of coffee makers with timers cost $35,000 and is valued at $35,000. What is the value of the Daily Grind's inventory using LCM?

Answer 1

The correct answer is C) $45,000.

The value of the Daily Grind's inventory using LCM is $45,000.

LMC stands for Lower of Cost or Market. It is one of the many methods in the accounting of valuing inventory in a company. The value assigned to the inventory is the amount it was recorded when the purchase was first done. With this, the company wants to protect itself from the many changes in the purchasing prices of the inventory.

The other options of the question were A)$35,000. B)$75,000. D)$55,000.