D. Lower of Cost and Net Realizable Value Review ProblemThe Casper Golf Company has five inventory items as of December 31, 2018:

Item Number, Product, Historical, Cost Sales Price

Item #1 Shirts $28,000 $40,000

Item #2 Pants 48,500 50,000

Item #3 Shoes 17,000 16,000

Item #4 Golf Clubs 33,000 39,000

Item #5 Golf Balls 25,000 25,000

Assume that selling costs consist of a 10% sales commission.

Required:

1. Compute Casper's inventory value at 12/31/2018 assuming that the company applies the lower of cost and NRV rule on an individual item basis.

2. Compute Casper's inventory value at 12/31/2018 assuming that the company applies the lower of cost and NRV rule on a categorical basis. Assume the company has two product lines: clothing (shirts, pants and shoes) and equipment (clubs and balls).