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 1 year ago

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