Lower-of-Cost-or-Market Method

On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10.

Item	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)
JFW1	101	$43	$38
SAW9	201	21	24

Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the inventory at the lower-of-cost-or-market by applying lower-of-cost-or-market to each inventory item, as shown in Exhibit 10. Market Value per Unit (Net Realizable Value) Item Inventory Quantity Cost per Unit JFW1 101 $43 $38 SAW9 201 21 24 Exhibit 10 Determining Inventory at Lower of Cost or Market (LCM) Market Value per Unit Inventory Cost per Quantity Unit Lower of Cost or Market (LCM) Item (Net Realizable Value) Cost Market 400 120 Echo Foxtrot Sierra Tango Total $10.25 22.50 8.00 14.00 $ 9.50 24.10 7.75 14.75 600 280 $ 4,100 2,700 4,800 3,920 $15,520 $ 3,800 2,892 4,650 4,130 $15,472 $ 3,800 2,700 4,650 3,920 $ 15,070 (1) Applied Individual Item by Item Class 1: Echo Foxtrot Subtotal 400 120 $10.25 22.50 $ 9.50 24.10 $ 4,100 2,700 $ 6,800 $ 3,800 2,892 $ 6,692 $ 6,692 (2) Applied Class by Class Class 2: Sierra Tango Subtotal Total 600 280 8.00 14.00 7.75 14.75 $ 4,800 3,920 $ 8,720 $15,520 $ 4,650 4,130 $ 8,780 $15,472 8,720 $15,412 Echo Foxtrot 400 120 $10.25 22.50 $ 9.50 24.10 7.75 (3) Applied in Total Sierra Tango Total 600 280 $ 4,100 2,700 4,800 3,920 $15,520 8.00 14.00 $ 3,800 2,892 4,650 4,130 $15472 14.75 $ 15,472 Share Image