Question

Martinez Company's ending inventory includes the following items.

  

		Per Unit
Product	Units	Cost		Market
Helmets	42	$	64	$	60
Bats	35		82		114
Shoes	56		101		105
Uniforms	60		46		46

  

Compute the lower of cost or market for ending inventory applied separately to each product.

Answer 1

Helmets

Cost = $64 per unit

Market rate = $60 per unit

Therefore, following lower of cost or market approach, Inventory to be valued using Market rate.

Total Helmet Value = 42 units * $60 per unit = $2,520

Bats

Cost = $82 per unit

Market rate = $114 per unit

Therefore, following lower of cost or market approach, Inventory to be valued using Cost rate.

Total Bats Value = 35 units * $82 per unit = $2,870

Shoes

Cost = $101 per unit

Market rate = $105 per unit

Therefore, following lower of cost or market approach, Inventory to be valued using Cost rate.

Total Shoes Value = 56 units * $101 per unit = $5,656

Uniforms

Cost = $46 per unit

Market rate = $46 per unit

Both the rates are same, so we can use any of them.

Total Uniforms Value = 60 units * $46 per unit = $2,760

Total value of all Inventory = $13,806