In applying the LCM rule, the inventory of surgical equipment would be valued at:

Question

Quizplus · Accepted Answer

To apply the LCM (or lower of cost or market) rule, we compare the original cost of the inventory to its current market value and choose the lower of the two as the new value for the inventory.

For surgical equipment, we have: 
- Cost of Inventory 1: $200 
- Market Value of Inventory 1: $130 
- Cost of Inventory 2: $150 
- Market Value of Inventory 2: $170

Comparing the cost of each inventory to its market value, we get: 
- LCM for Inventory 1: $130 (market value) 
- LCM for Inventory 2: $150 (cost)

Therefore, the total value of the surgical equipment inventory using the LCM rule would be: 
$130 (LCM for Inventory 1) + $150 (LCM for Inventory 2) = $280

The closest answer choice to $280 is C) $170.

In Applying the LCM Rule, the Inventory of Surgical Equipment