Kingsway Limited Applies the Lower of Cost or Market, Defined

Kingsway Limited applies the lower of cost or market, defined as net realizable value, to value its three different inventory item.The following information was taken from the company's accounting records at December 31, 2013: $\begin{array}{rrrrrr}\text { Inventory }&\text { Number } & \text { Cost } & \text { Replacement } & \text { Net realizable } & \text { Inventory } \\&\text { Item } & \text { on hand } & \text { Cost } & \text { Value } & \text { at cost }\\\hline\# 1103 & 200 & \$ 15.00 & \$ 14.50 & \$ 14.35 & \$ 3,000 \\\# 1144 & 300 & \$ 35.00 & \$ 37.00 & \$ 36.00 & \$ 10,500 \\\# 3367 & 225 & \$ 125,00 & \$ 117,00 & \$ 115,00 & \$ 28,125\\\text { Total Cost }&&&&&\$41,625\end{array}$ Required:
A) Compute the value of inventory applying the lower of cost or market (LCM) on an item-by-item basis.B) Prepare any required journal entries based on your results in Part A.
C) How would your answer be different if they applied LCM on a total inventory basis? D) Which of the two methods is more conservative? Why?
E) Which do you think management would prefer? Why?