Question

EX 6-15 Lower-of-cost-or-market inventory Obj. 6 On the basis of the following data, determine the value of the inventory at the lower of cost or market applied to (a) each item in the inventory, (b) each class of inventory, and (c) total inventory. Assemble the data in the form illustrated in Exhibit 10. IPLATE Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Product Class 1: Model A Model B Model Class 2: Model D Model E 300 500 150 $140 90 60 $125 112 59 400 115 145

Answer 1

(a) each item of inventory

Product	Quantity	Cost per unit	Total Cost	NRV per unit	Total NRV	Value of Inventory
Class 1
Model A	300	$               140	$         42,000	$               125	$         37,500	$         37,500
Model B	500	$                 90	$         45,000	$               112	$         56,000	$         45,000
Model C	150	$                 60	$            9,000	$                 59	$            8,850	$            8,850
Class 2
Model D	800	$               120	$         96,000	$               115	$         92,000	$         92,000
Model E	400	$               140	$         56,000	$               145	$         58,000	$         56,000
Total Value of Inventory						$      2,39,350

(b) each class of inventory

Product	Quantity	Cost per unit	Total Cost	NRV per unit	Total NRV	Value of Inventory
Class 1
Model A	300	$               140	$         42,000	$               125	$         37,500
Model B	500	$                 90	$         45,000	$               112	$         56,000
Model C	150	$                 60	$            9,000	$                 59	$            8,850
Total Class 1			$         96,000		$      1,02,350	$         96,000
Class 2
Model D	800	$               120	$         96,000	$               115	$         92,000
Model E	400	$               140	$         56,000	$               145	$         58,000
Total Class 2			$      1,52,000		$      1,50,000	$      1,50,000
Total Value of Inventory						$      2,46,000

(c) Total Inventory

Product	Quantity	Cost per unit	Total Cost	NRV per unit	Total NRV	Value of Inventory
Class 1
Model A	300	$               140	$         42,000	$               125	$         37,500
Model B	500	$                 90	$         45,000	$               112	$         56,000
Model C	150	$                 60	$            9,000	$                 59	$            8,850
Total Class 1			$         96,000		$      1,02,350
Class 2
Model D	800	$               120	$         96,000	$               115	$         92,000
Model E	400	$               140	$         56,000	$               145	$         58,000
Total Class 2			$      1,52,000		$      1,50,000
Total Value of Inventory			$      2,48,000		$      2,52,350	$      2,48,000