Lower-of-Cost-or-Market (LCM) Method The following data are taken from the Smith & Wesson Corporation's inventory accounts: Item Code Quantity Unit Cost Replacement Cost ZXE 100 $42 $40 XYF 300 53 54 MNJ 400 42 40 UBS 200 53 57 Calculate the value of the company's ending inventory using the lower-of-cost-or-market method applied to each item of inventory.
Valuation of the company's ending inventory using the lower-of-cost-or-market method
Item code | Quantity | Unit cost | Replacement cost | Valuation base | Value of inventory |
ZXE | 100 | 42 | 40 | Replacement cost | 4,000 |
XYF | 300 | 53 | 54 | Unit cost | 15,900 |
MNJ | 400 | 42 | 40 | Replacement cost | 16,000 |
UBS | 200 | 53 | 57 | Unit cost | 10,600 |
$46,500 |
Hence, value of ending inventory = $46,500
Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.
Get Answers For Free
Most questions answered within 1 hours.