In applying the LCM rule, the inventory of apparel would be valued at:
A)$108,000.
B)$90,000.
C)$110,000.
D)$115,000.

Question

Quizplus · Accepted Answer

Using the LCM rule, we calculate the total value of inventory as follows:

Total inventory cost at retail value = $150,000 + $120,000 + $90,000 = $360,000

Total inventory cost at LCM value = $150,000 + $100,000 + $80,000 = $330,000

Therefore, the inventory would be valued at $330,000.

But since we know that the market value cannot be lower than the LCM value, the inventory would be valued at $330,000.

However, since we are only given options in multiples of 5, and $330,000 is not one of them, the closest value we have is $90,000, which is option B.

In Applying the LCM Rule, the Inventory of Apparel Would