Question

On the basis of the following data, determine the value of the inventory at the lower of cost or market.

Product Inventory Cost Per Market Value per Unit
Quantity Unit (Net Realizable Value)
Class 1:
Model A 8 $171 $156
Model B 50 206 183
Model C 46 249 236
Class 2:
Model D 35 158 137
Model E 34 278 296

a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.

Inventory at the Lower of Cost or Market
Product Total Cost Total Market Lower of Total Cost or Total Market
A
B
C
D
E
Total

b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.

Answer 1

The computation is shown below:

Step-by-step explanation:

The computation is shown below:

Product Total Cost Total Market Lower of Total Cost or Total Market

A $1,368 $1,248 $1,248

($171 × 8 units) ($156 × 8 units)

B $10,300 $9,150 $9,150

($206 × 50 units) ($183 × 50 units)

C $11,454 $10,856 $10,856

($249 × 46 units) ($236 × 46 units)

D $5,530 $4,795 4,795

($158 × 35 units) ($137 × 35 units)

E $9,452 $10,064 $9,452

($278 × 34 units) ($296 × 34 units)

Total $35,501