Question

A company normally sells it products for $20 per unit, which includes a profit margin of 25%. However, the

selling price has fallen to $15 per unit. This company's current inventory consists 200 units purchased at $16

per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of inventory at the lower of

cost or market. ​

Answer 1

Answer:

$2,600

Explanation:

The computation of the inventory value is shown below:

Market value = 200 units × $16

= $3,200

And, the cost is

= 200 units × $13

= $2,600

So the lower of cost or market value would be considered

Since $2,600 would be lower so the same would be equivalent to the inventory amount