Question

Zytex Diagnostics has just completed its physical inventory, as shown below. Calculate the lower of cost...

Zytex Diagnostics has just completed its physical inventory, as shown below. Calculate the lower of cost or market ending inventory using: Item by item method, and the major category method.

Category J QTY Cost Market
Item 1 140 40 44
Item 2 240 80 78
Category K
Item 3 100 20 16
Item 4 50 30 32
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Answer #1

Item by item method

Category J QTY Cost Market Lower of cost or market
Item 1 140 40 44 140*40 = 5600
Item 2 240 80 78 240*78 = 18720
Category K
Item 3 100 20 16 100*16 = 1600
Item 4 50 30 32 50*30 = 1500
Total 27420

Major category method

Category J QTY Cost market
Item 1 140 140*40 = 5600 140*44 = 6160
Item 2 240 240*80 = 19200 240*78 = 18720
Total 24800 24880
Category K
Item 3 100 2000 1600
Item 4 50 1500 1600
Total 3500 3200

Total Value of inventory = 24800+3200 = 28000

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