Lower of Cost or Market

Moore Company uses the LIFO inventory method and carries Product A in inventory on December 31, 2016, at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit and the replacement cost is $6.50.

Under the lower of cost or market rule, Moore's December 31, 2016, inventory of Product A should be valued at a unit cost of:

a.$7.00

b.$9.50

c.$6.50

d.$9.00