A manufacturer produces four products, each using a different raw material. The following table provides cost and market value information on these inventories.

Requirement

For each of the following inventory items, determine whether a write-down is required. (NRV = Net realizable value.)

Would be appreciated if you included some explanations

Inventory item Finished good A Raw material A Finished good B Raw material B Finished good C Raw material C Finished good D Raw material D $ Cost per unit Replacement cost per unit 40 20 $ 40 20 40 20 40 20 40 5 30 35 $ NRV per unit 70 70 20 20 Write-down required? Yes/No No Yes