Question

Lower-of-Cost-or-Market (LCM) Method The Venner Company had the following inventory at year-end: Unit Price Quantity Cost Market Fans Model X1 300 $48 $49 Model X2 250 52 54 Model X3 400 59 56 Heaters Model B7 500 54 58 Model B8 290 65 62 Model B9 100 71 68 Required Determine the value of ending inventory after applying the lower-of-cost-or-market method to each item of inventory.

Answer 1

• All working forms part of the answer

	Units	Cost per unit	Market price per unit	Lower of Cost of Market price per unit	Value of Ending Inventory
	[A]	[B]	[C]	[D = lower of 'B' or 'C']	[E = A x D]
Fans:
Model X1	300	$               48.00	$             49.00	$                 48.00	$    14,400.00
Model X2	250	$               52.00	$             54.00	$                 52.00	$    13,000.00
Model X3	400	$               59.00	$             56.00	$                 56.00	$    22,400.00
Ending Inventory value of Fans					$    49,800.00
Heaters:
Model B7	500	$               54.00	$             58.00	$                 54.00	$    27,000.00
Model B8	290	$               65.00	$             62.00	$                 62.00	$    17,980.00
Model B9	100	$               71.00	$             68.00	$                 68.00	$       6,800.00
Ending Inventory value of Heaters					$    51,780.00
Total value of Ending Inventory					$ 101,580.00 = ANSWER