A company's normal selling price for its product is $20 per unit.However,due to market competition,the selling price has fallen to $15 per unit.This company's current FIFO inventory consists of 200 units purchased at $16 per unit.Net realizable value has fallen to $13 per unit.Calculate the value of this company's inventory at the lower of cost or market.

Question

Quizplus · Accepted Answer

The inventory should be valued at the lower of cost or market. The cost is $16 per unit for 200 units ($3,200), and the market value (net realizable value) is $13 per unit for 200 units ($2,600). Therefore, the inventory should be valued at $2,600.

A Company's Normal Selling Price for Its Product Is $20