Iris Company has provided the following information regarding two of its items of inventory at year-end: • There are 100 units of Item A, having a cost of $20 per unit and a replacement cost of $18 per unit.
• There are 50 units of Item B, having a cost of $50 per unit and a replacement cost of $55 per unit.
How much is the ending inventory using lower of cost or market on an item-by-item basis?
A) $4,300.
B) $4,500.
C)$4,750.
D)$4,550.

Question

Quizplus · Accepted Answer

The ending inventory is calculated using the lower of cost or market for each item. For Item A, the lower cost is $18 per unit, so 100 units x $18 = $1,800. For Item B, the cost is lower at $50 per unit, so 50 units x $50 = $2,500. Total ending inventory is $1,800 + $2,500 = $4,300.

Iris Company Has Provided the Following Information Regarding Two of Its