ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 5 Reporting & Analyzing Inventories Dr. Fred Barbee Solution to Short-Problem #2

Short Problem #2

A company reported the following data related to its ending inventory::

Product	Units	Cost	Market
849	100	$10	$11
842	75	16	14
847	60	14	13
860	40	16	20

Calculate the lower-of-cost-or-market on the: (a) Inventory as a whole; and (b) Inventory applied separately to each product.

Solution

Product	Units on Hand	Per Unit Cost	Market	Total Cost	Total Market	LCM by Product
849	100	$10	$11	$1,000	$1,100	$1,000
842	75	16	14	1,200	1,050	1,050
847	60	14	13	840	780	780
860	40	16	20	640	800	640
				$3,680	$3,730	$3,470