Commodity X sells for $18.00; selling expenses are $3.60; normal profit is $4.50. If the cost of Commodity X is $11.70 and the replacement cost is $10.00, the lower of cost or market is

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The lower of cost or market rule requires comparing the cost ($11.70) with the market value, which is the replacement cost ($10.00) limited by the ceiling (net realizable value: $18.00 - $3.60 = $14.40) and the floor (net realizable value minus normal profit: $14.40 - $4.50 = $9.90). The lower of cost or market is $9.90.

Commodity X Sells for $18