Teel Distribution Co. has determined its December 31, 2007 inventory on a FIFO basis at $250,000. Information pertaining to that inventory follows:

Estimated selling price $255,000

Estimated cost of disposal/completion 10,000

Normal profit margin 30,000

Current replacement cost 225,000

Teel records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2007, the loss that Teel should recognize is

a. $0. b. $5,000. c. $20,000. d. $25,000.

Answer key says is is B, but I keep getting D. Please help to explain.