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. | ||||||
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