Question

Base your answers to questions 4 through 6 on the following information The May 31, 20X3, inventory records of Carson's Supply Center show the data below. Unit Price Item Automotive: Quantity Cost Market Mufflers Batteries Oil filters 52 42 73 $18.00 14.00 2.50 $17.50 14.25 2.40 Lawn furniture: Chairs Tables Swings 8.00 10.00 12.50 42 7.75 10.50 13.00 27 Garden tools: Rakes Shovels Hoes 85 62 72 3.50 3.25 3.50 3.25 3.50 3.25 REQUIRED: Using the work sheet at the back of this unit, compute the dollar amount of the ending inventory at the lower of cost or market value, and then answer questions 4 through 6. In computing the dollar amounts, you should apply the following methods: 1) Item-by-item method 2) Group method 3) Total inventory method 4. The inventory valuation as calculated under the item-by-item (each item) method is A. $3,414.45. B. $3,408.75 C. $3,377.95. D. $3,362.55. 5. The inventory valuation as calculated under the group (each category) method is A. $3,362.55. B. $3,377.95. C. $3,402.75. D. $3,414.45. 6. The inventory valuation as calculated under the total inventory method is A. $3,414.45. B. $3,433.95. C. $3,502.85. D. $3,519.65.

Answer 1

Question 4

Correct answer—(C) $3377.95

	Quantity	Cost per unit	Total cost	Market value per unit	Total market value	Lower of cost or Market
Automotive
Mufflers	52	$ 18.00	$      936.00	$   17.50	$      910.00	$     910.00
Batteries	42	$ 14.00	$      588.00	$   14.25	$      598.50	$     588.00
Oil Filters	73	$    2.50	$      182.50	$     2.40	$      175.20	$     175.20
Lawn furniture
Chairs	42	$    8.00	$      336.00	$     7.75	$      325.50	$     325.50
Tables	33	$ 10.00	$      330.00	$   10.50	$      346.50	$     330.00
Swings	27	$ 12.50	$      337.50	$   13.00	$      351.00	$     337.50
Garden tools
Rackets	85	$    3.50	$      297.50	$     3.25	$      276.25	$     276.25
Shovels	62	$    3.25	$      201.50	$     3.50	$      217.00	$     201.50
Hoes	72	$    3.50	$      252.00	$     3.25	$      234.00	$     234.00
			$ 3,461.00		$   3,433.95	$ 3,377.95

Question 5

Correct answer---(D) $3414.45

	Quantity	Cost per unit	Total cost	Market value per unit	Total market value	Lower of cost or Market
Automotive
Mufflers	52	$ 18.00	$      936.00	$   17.50	$      910.00
Batteries	42	$ 14.00	$      588.00	$   14.25	$      598.50
Oil Filters	73	$    2.50	$      182.50	$     2.40	$      175.20
Subtotal			$ 1,706.50		$   1,683.70	$ 1,683.70
Lawn furniture
Chairs	42	$    8.00	$      336.00	$     7.75	$      325.50
Tables	33	$ 10.00	$      330.00	$   10.50	$      346.50
Swings	27	$ 12.50	$      337.50	$   13.00	$      351.00
Subtotal			$ 1,003.50		$   1,023.00	$ 1,003.50
Garden tools
Rackets	85	$    3.50	$      297.50	$     3.25	$      276.25
Shovels	62	$    3.25	$      201.50	$     3.50	$      217.00
Hoes	72	$    3.50	$      252.00	$     3.25	$      234.00
Subtotal			$      751.00		$      727.25	$     727.25
Grand total						$ 3,414.45

Question 6

Correct answer---(B) $ 3433.95

	Quantity	Cost per unit	Total cost	Market value per unit	Total market value	Lower of cost or Market
Automotive
Mufflers	52	$ 18.00	$      936.00	$   17.50	$      910.00
Batteries	42	$ 14.00	$      588.00	$   14.25	$      598.50
Oil Filters	73	$    2.50	$      182.50	$     2.40	$      175.20
Lawn furniture
Chairs	42	$    8.00	$      336.00	$     7.75	$      325.50
Tables	33	$ 10.00	$      330.00	$   10.50	$      346.50
Swings	27	$ 12.50	$      337.50	$   13.00	$      351.00
Garden tools
Rackets	85	$    3.50	$      297.50	$     3.25	$      276.25
Shovels	62	$    3.25	$      201.50	$     3.50	$      217.00
Hoes	72	$    3.50	$      252.00	$     3.25	$      234.00
			$ 3,461.00		$   3,433.95	3433.95