Question

A company has the following per unit original costs and replacement costs for its inventory. LCM is applied to individual items. Part A: 50 units with a cost of $5, and replacement cost of $4.50 Part B: 75 units with a cost of $6, and replacement cost of $6.50 Part C: 160 units with a cost of $3, and replacement cost of $2.50 Under the lower of cost or market method, the total value of this company's ending inventory is:

Answer 1

Replacement Lower of cost or Cost Units Inventory cost cost replacement cost Part A $5.00 $4.50 $4.50 50 $225 Part B $6.00 $6.50 $6.00 75 $450 Part 1 $3.00 $2.50 $2.50 160 $ 400 Total value of this company's ending inventory $ 1,075 Answer: $1,075