PE 7-5A Lower-of-cost-or-market method

On the basis of the following data, determine the value of the inventory at the lower of
cost or market. Apply lower of cost or market to each inventory item as shown in Exhibit 8.

Item Inventory Quantity Unit Cost Price Unit Market Price
IA17           200                         $40                      $38
TX24          150                          55                         60

Answer:
   Unit Unit Total 2  Inventory Cost Market   Lower 3 Commodity Quantity Price Price Cost Market of C or M 4 IA17  200  $40  $38  $ 8,000 $ 7,600  $  7,600 5 TX24  150  55  60   8,250  9,000      8,250 6 Total     $16,250 $16,600  $15,850

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