The Eserine Wood Corporation manufactures desks. Most of the company's desks are standard models that are sold at catalogue prices. At December 31, 2017, the following finished desks appear in the company's inventory:

The 2017 catalogue was in effect through November 2017, and the 2018 catalogue is effective as of December 1, 2017. All catalogue prices are net of the usual discounts. Generally, the company tries to obtain a 20% gross margin on the selling price and it has usually been successful in achieving this.
Instructions
(a) Assume that the company has adopted a lower of FIFO cost and net realizable value approach for the valuation of inventories and applies it on an individual inventory item basis. At what total inventory value will the desks appear on the company's December 31, 2017 balance sheet?
(b) Explain the rationale for using the lower of cost and net realizable rule for inventories.
(c) Explain the impact if inventory was valued at lower of cost and net realizable value on a total basis.

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Type A Type D Type B $490 450 440 Finished Desks 2017 catalogue selling price FIFO cost per inventory list, Dec. 31, 2017 Estimated current cost to manufacture $460 410 Type C $890 830 $1,040 960 (at Dec. 31, 2017, and early 2018) Sales commissions and estimated other costs 460 790 1,000 of disposal 2018 catalogue selling price Quantity on hand 40 575 15 65 650 95 780 113 130 1,420 110