Question

A company's normal selling price for its product is $23 per unit. However, due to market competition, the selling price has fallen to $18 per unit. This company's current FIFO inventory consists of 230 units purchased at $19 per unit. Net realizable value has fallen to $16 per unit. Calculate the value of this company's inventory at the lower of cost or market.

a. $3,780

b. $3,630

c. $4,370

d. $4,140

e. $3,680

Answer 1

Answer:

e. $3,680

Explanation:

Calculation for the value of this company's inventory at the lower of cost or market.

Using this formula

Inventory value at lower of cost= Current FIFO inventory units × Fallen Net realizable value per unit

Let plug in the formula

Inventory value at lower of cost=230 units× $16 per unit

Inventory value at lower of cost=$3,680

Therefore the value of the company's inventory at the lower of cost or market will be $3,680