Lower-of-Cost-or-Market Inventory
On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.
Product |
Inventory |
Cost Per |
|
Class 1: | |||
Model A | 18 | $108 | $84 |
Model B | 21 | 88 | 85 |
Model C | 47 | 201 | 196 |
Class 2: | |||
Model D | 17 | 67 | 48 |
Model E | 28 | 210 | 185 |
a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.
Inventory at the Lower of Cost or Market | ||||||
Product |
Inventory Quantity |
Cost per Unit |
Market Value per Unit (Net Realizable Value) |
Cost | Market | Lower of Cost or Market |
Model A | $ | $ | $ | $ | $ | |
Model B | ||||||
Model C | ||||||
Model D | ||||||
Model E | ||||||
Total | $ | $ | $ |
b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.
Inventory at the Lower of Cost or Market |
||||||
Product |
Inventory Quantity |
Cost per Unit |
Market Value per Unit (Net Realizable Value) |
Cost | Market | Lower of Cost or Market |
Class 1: | ||||||
Model A | $ | $ | $ | $ | ||
Model B | ||||||
Model C | ||||||
Subtotal | $ | $ | $ | |||
Class 2: | ||||||
Model D | $ | $ | ||||
Model E | ||||||
Subtotal | $ | $ | ||||
Total | $ | $ | $ |
c. Determine the value of the inventory at the lower of cost or market applied to total inventory.
Inventory at the Lower of Cost or Market | ||||||
Product |
Inventory Quantity |
Cost per Unit |
Market Value per Unit (Net Realizable Value) |
Cost | Market | Lower of Cost or Market |
Model A | $ | $ | $ | $ | ||
Model B | ||||||
Model C | ||||||
Model D | ||||||
Model E | ||||||
Total | $ | $ | $ |
Solution-
A. To Calculate the value of the inventory at the lower of cost or market applied to each item in the inventory-
Cost = Cost per unit * Inventory Quantity
Market = Market value per unit * Inventory Quantity
B. To Calculate the value of the inventory at the lower of cost or market applied to each class of inventory-
C. To Calculate the value of the inventory at the lower of cost or market applied to total inventory.
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