The lower of cost or market method is based on the assumption that input costs and selling prices generally move together.

Name: The lower of cost or market method is based on the assumption that input costs and selling prices generally move together.
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The lower of cost or market method assumes that if the market price of inventory falls below its cost, the inventory's value should be written down to reflect the lower market value, implying that input costs and selling prices generally move together.

The Lower of Cost or Market Method Is Based on the Assumption