Lower of Cost or Market Inventory On the basis of the following data, determine the value of the inventory at the lower of cost or market Assemble the data in the form illustrated in Exhibit 10 Product Inventory Quantity Cost Per Unit Market Value per Unit (Net Realizable Value) Class 1 Model A 47 $168 $179 Model B 37 299 294 Model C 44 290 297 Class 2 Model D 33 143 135 Model E 10 291 294 a Determine the value of the inventory at the lower of cost or market applied to each item in the inventory Inventory at the Lower of Cost or Market Product Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Cost Market Lower of Cost or Market Model A fill in the blank 4d3fbb0a7fba032 1 $fill in the blank 4d3fbb0a7fba032 2 $fill in the blank 4d3fbb0a7fba032 3 $fill in the blank 4d3fbb0a7fba032 4 $fill in the blank 4d3fbb0a7fba032 5 $fill in the blank 4d3fbb0a7fba032 6 Model B fill in the blank 4d3fbb0a7fba032 7 fill in the blank 4d3fbb0a7fba032 8 fill in the blank 4d3fbb0a7fba032 9 fill in the blank 4d3fbb0a7fba032 10 fill in the blank 4d3fbb0a7fba032 11 fill in the blank 4d3fbb0a7fba032 12 Model C fill in the blank 4d3fbb0a7fba032 13 fill in the blank 4d3fbb0a7fba032 14 fill in the blank 4d3fbb0a7fba032 15 fill in the blank 4d3fbb0a7fba032 16 fill in the blank 4d3fbb0a7fba032 17 fill in the blank 4d3fbb0a7fba032 18 Model D fill in the blank 4d3fbb0a7fba032 19 fill in the blank 4d3fbb0a7fba032 20 fill in the blank 4d3fbb0a7fba032 21 fill in the blank 4d3fbb0a7fba032 22 fill in the blank 4d3fbb0a7fba032 23 fill in the blank 4d3fbb0a7fba032 24 Model E fill in the blank 4d3fbb0a7fba032 25 fill in the blank 4d3fbb0a7fba032 26 fill in the blank 4d3fbb0a7fba032 27 fill in the blank 4d3fbb0a7fba032 28 fill in the blank 4d3fbb0a7fba032 29 fill in the blank 4d3fbb0a7fba032 30 Total $fill in the blank 4d3fbb0a7fba032 31 $fill in the blank 4d3fbb0a7fba032 32 $fill in the blank 4d3fbb0a7fba032 33 Feedback Set up a table with 3 columns for the current information on number of units, unit cost price, and unit market price Multiply the number of units by the unit cost price and enter the total cost amount in the 4 th column Multiply the number of units by the unit market price and enter the total market amount in the 5 th column Then enter the lower of the two amounts from the 4 th and 5 th columns in the 6 th column Finally, total the 4 th , 5 th and 6 th columns The total of column 6 shows the total lower of cost or market applied on an item by item basis Exhibit 10 Determining Inventory at Lower of Cost or Market (LCM) Item Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Cost Market LCM Echo 400 $10 25 $9 50 $ 4,100 $ 3,800 $ 3,800 Foxtrot 120 22 50 24 10 2,700 2,892 2,700 Sierra 600 8 00 7 75 4,800 4,650 4,650 Tango 280 14 00 14 75 3,920 4,130 3,920 Total $15,520 $15,472 $15,070 b Determine the value of the inventory at the lower of cost or market applied to each class of inventory Inventory at the Lower of Cost or Market Product Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Cost Market Lower of Cost or Market Class 1 Model A fill in the blank f5af5d066063010 1 $fill in the blank f5af5d066063010 2 $fill in the blank f5af5d066063010 3 $fill in the blank f5af5d066063010 4 $fill in the blank f5af5d066063010 5 Model B fill in the blank f5af5d066063010 6 fill in the blank f5af5d066063010 7 fill in the blank f5af5d066063010 8 fill in the blank f5af5d066063010 9 fill in the blank f5af5d066063010 10 Model C fill in the blank f5af5d066063010 11 fill in the blank f5af5d066063010 12 fill in the blank f5af5d066063010 13 fill in the blank f5af5d066063010 14 fill in the blank f5af5d066063010 15 Subtotal $fill in the blank f5af5d066063010 16 $fill in the blank f5af5d066063010 17 $fill in the blank f5af5d066063010 18 Class 2 Model D fill in the blank f5af5d066063010 19 fill in the blank f5af5d066063010 20 fill in the blank f5af5d066063010 21 $fill in the blank f5af5d066063010 22 $fill in the blank f5af5d066063010 23 Model E fill in the blank f5af5d066063010 24 fill in the blank f5af5d066063010 25 fill in the blank f5af5d066063010 26 fill in the blank f5af5d066063010 27 fill in the blank f5af5d066063010 28 Subtotal $fill in the blank f5af5d066063010 29 $fill in the blank f5af5d066063010 30 fill in the blank f5af5d066063010 31 Total $fill in the blank f5af5d066063010 32 $fill in the blank f5af5d066063010 33 $fill in the blank f5af5d066063010 34 Feedback Under the class method, a company applies the lower of cost or market to the total cost and total market for each class of items rather than each individual inventory item In this case, you will have a lower of cost or market value for Class 1 and Class 2 that will be used to determine the total lower of cost or market c Determine the value of the inventory at the lower of cost or market applied to total inventory Inventory at the Lower of Cost or Market Product Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Cost Market Lower of Cost or Market Model A fill in the blank 21c71c015f8b052 1 $fill in the blank 21c71c015f8b052 2 $fill in the blank 21c71c015f8b052 3 $fill in the blank 21c71c015f8b052 4 $fill in the blank 21c71c015f8b052 5 Model B fill in the blank 21c71c015f8b052 6 fill in the blank 21c71c015f8b052 7 fill in the blank 21c71c015f8b052 8 fill in the blank 21c71c015f8b052 9 fill in the blank 21c71c015f8b052 10 Model C fill in the blank 21c71c015f8b052 11 fill in the blank 21c71c015f8b052 12 fill in the blank 21c71c015f8b052 13 fill in the blank 21c71c015f8b052 14 fill in the blank 21c71c015f8b052 15 Model D fill in the blank 21c71c015f8b052 16 fill in the blank 21c71c015f8b052 17 fill in the blank 21c71c015f8b052 18 fill in the blank 21c71c015f8b052 19 fill in the blank 21c71c015f8b052 20 Model E fill in the blank 21c71c015f8b052 21 fill in the blank 21c71c015f8b052 22 fill in the blank 21c71c015f8b052 23 fill in the blank 21c71c015f8b052 24 fill in the blank 21c71c015f8b052 25 Total $fill in the blank 21c71c015f8b052 26 $fill in the blank 21c71c015f8b052 27 $fill in the blank 21c71c015f8b052 28 Feedback

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 24, 2024

Lower-of-Cost-or-Market Inventory On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data

Lower-of-Cost-or-Market Inventory

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

Product	Inventory Quantity	Cost Per Unit	Market Value per Unit (Net Realizable Value)
Class 1:
Model A	47	$168	$179
Model B	37	299	294
Model C	44	290	297
Class 2:
Model D	33	143	135
Model E	10	291	294

a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.



Inventory at the Lower of Cost or Market
Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
Model A	fill in the blank 4d3fbb0a7fba032_1	$fill in the blank 4d3fbb0a7fba032_2	$fill in the blank 4d3fbb0a7fba032_3	$fill in the blank 4d3fbb0a7fba032_4	$fill in the blank 4d3fbb0a7fba032_5	$fill in the blank 4d3fbb0a7fba032_6
Model B	fill in the blank 4d3fbb0a7fba032_7	fill in the blank 4d3fbb0a7fba032_8	fill in the blank 4d3fbb0a7fba032_9	fill in the blank 4d3fbb0a7fba032_10	fill in the blank 4d3fbb0a7fba032_11	fill in the blank 4d3fbb0a7fba032_12
Model C	fill in the blank 4d3fbb0a7fba032_13	fill in the blank 4d3fbb0a7fba032_14	fill in the blank 4d3fbb0a7fba032_15	fill in the blank 4d3fbb0a7fba032_16	fill in the blank 4d3fbb0a7fba032_17	fill in the blank 4d3fbb0a7fba032_18
Model D	fill in the blank 4d3fbb0a7fba032_19	fill in the blank 4d3fbb0a7fba032_20	fill in the blank 4d3fbb0a7fba032_21	fill in the blank 4d3fbb0a7fba032_22	fill in the blank 4d3fbb0a7fba032_23	fill in the blank 4d3fbb0a7fba032_24
Model E	fill in the blank 4d3fbb0a7fba032_25	fill in the blank 4d3fbb0a7fba032_26	fill in the blank 4d3fbb0a7fba032_27	fill in the blank 4d3fbb0a7fba032_28	fill in the blank 4d3fbb0a7fba032_29	fill in the blank 4d3fbb0a7fba032_30
Total				$fill in the blank 4d3fbb0a7fba032_31	$fill in the blank 4d3fbb0a7fba032_32	$fill in the blank 4d3fbb0a7fba032_33

Feedback

Set up a table with 3 columns for the current information on number of units, unit cost price, and unit market price. Multiply the number of units by the unit cost price and enter the total cost amount in the 4^th column. Multiply the number of units by the unit market price and enter the total market amount in the 5^th column. Then enter the lower of the two amounts from the 4^th and 5^th columns in the 6^th column. Finally, total the 4^th, 5^th and 6^th columns. The total of column 6 shows the total lower-of-cost-or-market applied on an item-by-item basis.

Exhibit 10: Determining Inventory at Lower of Cost or Market (LCM)

Item	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	LCM
Echo	400	$10.25	$9.50	$ 4,100	$ 3,800	$ 3,800
Foxtrot	120	22.50	24.10	2,700	2,892	2,700
Sierra	600	8.00	7.75	4,800	4,650	4,650
Tango	280	14.00	14.75	3,920	4,130	3,920
Total				$15,520	$15,472	$15,070

b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.



Inventory at the Lower of Cost or Market
Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
Class 1:
Model A	fill in the blank f5af5d066063010_1	$fill in the blank f5af5d066063010_2	$fill in the blank f5af5d066063010_3	$fill in the blank f5af5d066063010_4	$fill in the blank f5af5d066063010_5
Model B	fill in the blank f5af5d066063010_6	fill in the blank f5af5d066063010_7	fill in the blank f5af5d066063010_8	fill in the blank f5af5d066063010_9	fill in the blank f5af5d066063010_10
Model C	fill in the blank f5af5d066063010_11	fill in the blank f5af5d066063010_12	fill in the blank f5af5d066063010_13	fill in the blank f5af5d066063010_14	fill in the blank f5af5d066063010_15
Subtotal				$fill in the blank f5af5d066063010_16	$fill in the blank f5af5d066063010_17	$fill in the blank f5af5d066063010_18
Class 2:
Model D	fill in the blank f5af5d066063010_19	fill in the blank f5af5d066063010_20	fill in the blank f5af5d066063010_21	$fill in the blank f5af5d066063010_22	$fill in the blank f5af5d066063010_23
Model E	fill in the blank f5af5d066063010_24	fill in the blank f5af5d066063010_25	fill in the blank f5af5d066063010_26	fill in the blank f5af5d066063010_27	fill in the blank f5af5d066063010_28
Subtotal				$fill in the blank f5af5d066063010_29	$fill in the blank f5af5d066063010_30	fill in the blank f5af5d066063010_31
Total				$fill in the blank f5af5d066063010_32	$fill in the blank f5af5d066063010_33	$fill in the blank f5af5d066063010_34

Feedback

Under the class method, a company applies the lower of cost or market to the total cost and total market for each class of items rather than each individual inventory item. In this case, you will have a lower of cost or market value for Class 1 and Class 2 that will be used to determine the total lower of cost or market.

c. Determine the value of the inventory at the lower of cost or market applied to total inventory.



Inventory at the Lower of Cost or Market
Product	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)	Cost	Market	Lower of Cost or Market
Model A	fill in the blank 21c71c015f8b052_1	$fill in the blank 21c71c015f8b052_2	$fill in the blank 21c71c015f8b052_3	$fill in the blank 21c71c015f8b052_4	$fill in the blank 21c71c015f8b052_5
Model B	fill in the blank 21c71c015f8b052_6	fill in the blank 21c71c015f8b052_7	fill in the blank 21c71c015f8b052_8	fill in the blank 21c71c015f8b052_9	fill in the blank 21c71c015f8b052_10
Model C	fill in the blank 21c71c015f8b052_11	fill in the blank 21c71c015f8b052_12	fill in the blank 21c71c015f8b052_13	fill in the blank 21c71c015f8b052_14	fill in the blank 21c71c015f8b052_15
Model D	fill in the blank 21c71c015f8b052_16	fill in the blank 21c71c015f8b052_17	fill in the blank 21c71c015f8b052_18	fill in the blank 21c71c015f8b052_19	fill in the blank 21c71c015f8b052_20
Model E	fill in the blank 21c71c015f8b052_21	fill in the blank 21c71c015f8b052_22	fill in the blank 21c71c015f8b052_23	fill in the blank 21c71c015f8b052_24	fill in the blank 21c71c015f8b052_25
Total				$fill in the blank 21c71c015f8b052_26	$fill in the blank 21c71c015f8b052_27	$fill in the blank 21c71c015f8b052_28