Question

In: Accounting

The following data refer to Bear Company's ending inventory: Item code Quantity Unit Cost Unit Market...

The following data refer to Bear Company's ending inventory:

Item code

Quantity

Unit Cost

Unit Market

Small

100

$228

$232

Medium

420

152

176

Large

600

168

176

Extra-Large

220

268

256


How much is the inventory if the lower of cost or market rule is applied to each item of inventory?

Select one:

A. $252,640

B. $243,760

C. $265,440

D. None of the above

Solutions

Expert Solution

C) $243,760
Item Quantity unit cost Market cost Cost or market value whichever is lower Value Working
Small 100 228 232 228 22800 100 X 228
Medium 420 152 176 152 63840 420 X 152
Large 600 168 176 168 100800 600 X 168
Extra Large 220 268 256 256 56320 220 X 256
Total 243760
The lower of cost or market rule states that a business must record the cost of inventory at whichever cost is lower – the original cost or its current market price
in the above case the small, medium and large will have to consider the $228,$152,$168 and for the Extra Large have to consider the $256.

ekkarill92 answered 2 years ago
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