Given the historical cost of product Z is $20, the selling price of product Z is $25, costs to sell product Z are $3, the replacement cost for product Z is $21, and the normal profit margin is 40% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method?

a. $18.

b. $20.

c. $21.

d. $22.

The answer is b

77. Given the historical cost of product Dominoe is $12, the selling price of product Dominoe is $15, costs to sell product Dominoe are $2, the replacement cost for product Dominoe is $11, and the normal profit margin is 20% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method?

a. $13.

b. $12.

c. $11.

d. $10.

The answer is c

The question is these two question ask the same question, but why the answer is historical cost and the other is replacement cost?