Question

Byron Company has five products in its inventory and uses the FIFO cost flow assumption. Specific data for each product are as follows:

Product	Cost	Selling Price	Estimated Cost of Disposal
A	$90,000	$150,000	$20,000
B	110,000	120,000	15,000
C	60,000	70,000	5,000
D	100,000	115,000	5,000
E	105,000	110,000	8,000

Required:

1. What is the correct inventory value, assuming the LCNRV rule is applied to each item of inventory?

Product	Inventory Value
A
B
C
D
E
Total	$

2. What is the correct inventory value, assuming the LCNRV rule is applied to the total of inventory?

Answer 1

Product	A	B	C	D	E
Selling Price	150000	120000	70000	115000	110000
Less: Estimated Cost of Disposal	20000	15000	5000	5000	8000
Net realizable value(NRV)	130000	105000	65000	110000	102000
1
Product	Cost	NRV	Inventory Value
A	90000	130000	90000
B	110000	105000	105000
C	60000	65000	60000
D	100000	110000	100000
E	105000	102000	102000
Total	465000	512000	457000
2
Correct inventory value	465000