Question

An analysis of the inventory owned by Owens Company as of the Company’s fiscal closing date is shown in the following table.

Item	Quantity	Cost per Unit			Market Value per Unit
A	200	$	20		$	17
B	190	$	50		$	52
C	400	$	34		$	30
D	320	$	25		$	29

Assuming Owens applies the lower-of-cost-or-market rule on an individual basis the amount of inventory shown on the balance sheet would be

Multiple Choice

$32,900.

$35,100.

$34,560.

$33,540.

Answer 1

Correct answer---$32900

Working

			Inventory value
Items	Cost per unit	Market value per unit	Per Unit as per Lower of cost or market value	Number of units	Total Value
A	$      20.00	$    17.00	$         17.00	200	$       3,400.00
B	$      50.00	$    52.00	$         50.00	190	$       9,500.00
C	$      34.00	$    30.00	$         30.00	400	$     12,000.00
D	$      25.00	$    29.00	$         25.00	320	$       8,000.00
Total ending inventory					$     32,900.00