Jones Pharmaceuticals is reviewing the value of one of its more expensive drugs.The drug has been selling for $32, but a competitor has recently introduced a new product that provides the same benefits with fewer side effects.Therefore, the drug can only be sold for $12 per unit.Its unit purchase cost was $22.The current replacement cost is $10.If inventory is reported at lower of cost or net realizable value, what amount should be reported for the inventory of 30,000 units?

Question

Quizplus · Accepted Answer

Since inventory should be reported at the lower of cost or net realizable value, we need to compare the unit purchase cost ($22) to the current replacement cost ($10) and choose the lower value. In this case, the net realizable value is $10 per unit, so the total inventory value for 30,000 units would be $300,000 (30,000 x $10). Therefore, the correct answer is choice C.

Jones Pharmaceuticals Is Reviewing the Value of One of Its