Given the historical cost of product Dominoe is $22, the selling price of product Dominoe is $30, costs to sell product Dominoe are $5, the replacement cost for product Dominoe is $20, and the normal profit margin is 20% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method?
A) $22.
B) $19.
C) $20.
D) $25.

Question

Quizplus · Accepted Answer

The lower-of-cost-or-market method requires the inventory to be valued at the lower of its historical cost or replacement cost. The replacement cost for product Dominoe is $20, which is lower than its historical cost of $22. Therefore, the inventory should be valued at $20.

Given the Historical Cost of Product Dominoe Is $22, the Selling