Question

he following information is from Guccii Company’s individual inventory items as of December 31, 2020.

Inventory	Quantity	Cost per Unit	Net Realizable Value per Unit
Classification:Premium
Item 1	152	$180	$185
Item 2	285	100	98
Item 3	380	165	175
Item 4	266	158	120
Classification: Classic
Item 5	190	100	98
Item 6	95	90	95
Item 7	950	105	115
Item 8	532	80	75

Required

a. Calculate lower-of-cost-or-net realizable value of Guccii's December 31, 2020, inventory applying the rule to each individual item.  

b. Calculate lower-of-cost-or-net realizable value of Guccii's December 31, 2020, inventory applying the rule by inventory category.  

c. Calculate lower-of-cost-or-net realizable value of Guccii's December 31, 2020, inventory applying the rule to total inventory.

Answer 1

Required a :
	Total cost ( Quantity * Cost per unit )	Total net realizable value ( Quantity * Net realizable value per unit )	Lower of Cost or net realizable value
Classification : Premium
Item 1	$                   27,360 [ 152 units * $180 ]	$                28,120 [ 152 units * $185 ]	$              27,360
Item 2	$                   28,500 [ 285 units * $100 ]	$                27,930 [ 285 units * $98 ]	$              27,930
Item 3	$                   62,700 [ 380 units * $165 ]	$                66,500 [ 380 units * $175 ]	$              62,700
Item 4	$                   42,028 [ 266 units * $158 ]	$                31,920 [ 266 units * $120 ]	$              31,920
Classification : Classic
Item 5	$                   19,000 [ 190 units * $100 ]	$                18,620 [ 190 units * $98 ]	$              18,620
Item 6	$                      8,550 [ 95 units * $90 ]	$                  9,025 [ 95 units * $95 ]	$                8,550
Item 7	$                   99,750 [ 950 units * $105 ]	$             109,250 [ 950 units * $115 ]	$              99,750
Item 8	$                   42,560 [ 532 units * $80 ]	$                39,900 [ 532 units * $75 ]	$              39,900
Inventory value			$           316,730

Required b :
	Total cost ( Quantity * Cost per unit )	Total net realizable value ( Quantity * Net realizable value per unit )	Lower of Cost or net realizable value
Classification : Premium
Item 1	$                   27,360	$                28,120
Item 2	$                   28,500	$                27,930
Item 3	$                   62,700	$                66,500
Item 4	$                   42,028	$                31,920
Total	$                 160,588	$             154,470	$           154,470
Classification : Classic
Item 5	$                   19,000	$                18,620
Item 6	$                      8,550	$                  9,025
Item 7	$                   99,750	$             109,250
Item 8	$                   42,560	$                39,900
Total	$                 169,860	$             176,795	$           169,860
Inventory value			$           324,330

Required c :
	Total cost ( Quantity * Cost per unit )	Total net realizable value ( Quantity * Net realizable value per unit )	Lower of Cost or net realizable value
Classification : Premium
Item 1	$                   27,360	$                28,120
Item 2	$                   28,500	$                27,930
Item 3	$                   62,700	$                66,500
Item 4	$                   42,028	$                31,920
Classification : Classic
Item 5	$                   19,000	$                18,620
Item 6	$                      8,550	$                  9,025
Item 7	$                   99,750	$             109,250
Item 8	$                   42,560	$                39,900
Total	$                 330,448	$             331,265	$           330,448
Inventory value			$           330,448