Question

The following information pertains to one item of inventory of the Simon Company: Per unit Cost $ 200 Replacement cost 170 Selling price 190 Disposal costs 10 Normal profit margin 30 Using the lower of cost or market method, this item should be valued at:

Answer 1

the item should be valued at $170

Step-by-step explanation:

The computation of the item that should be valued is shown below:

As we know that the inventory should be valued at lower of cost or market value

= Lower of $200 or $170 or ($190 - ($30 - $10))

= Lower of $200 or $170 or $170

= $170

Hence, the item should be valued at $170

And, the same is to be considered as it is relevant