Question

Lower-of-Cost-or-Market Inventory

On the basis of the following data:

Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)
Model A	12	$106	$102
Model B	45	84	70
Model C	36	254	243
Model D	31	85	88
Model E	41	132	148

Determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9.

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	$	$	$

Answer 1

• All working forms part of the answer
• Filled table:

Inventory at the Lower of Cost or Market
Product	Total Cost	Total Market	Lower of Total Cost or Total Market
	[A = Units x Cost per unit]	[B = Units x Market value per unit]	[Lower of ‘A’ and ‘B’]
A	$                                  1,272.00	$              1,224.00	$             1,224.00
B	$                                  3,780.00	$              3,150.00	$             3,150.00
C	$                                  9,144.00	$              8,748.00	$             8,748.00
D	$                                  2,635.00	$              2,728.00	$             2,635.00
E	$                                  5,412.00	$              6,068.00	$             5,412.00
Total	$                                22,243.00	$            21,918.00	$           21,169.00

• Working [for understanding]

Inventory at the Lower of Cost or Market
Product	Total Cost	Total Market
A	=12 units x $106	=12 units x $102
B	=45 units x $84	=45 units x $70
C	=36 units x $254	=36 units x $243
D	=31 units x $85	=31 units x $88
E	=41 units x $132	=41 units x $148
Total	Total	Total