Item 1 5 units Cost $50 Market $45 Item 2 7 units Cost $60 Market $65 Item 3 9 units Cost $30 Market $25 Applying the lower of c

Question

3 years ago

5

Item 1 5 units Cost $50 Market $45 Item 2 7 units Cost $60 Market $65 Item 3 9 units Cost $30 Market $25 Applying the lower of c

ost or market method, the reported value of this company's ending inventory if LCM is applied to individual items is _____. $870 $905 $920 $940

Business

1 answer:

Alexeev081 [22] · Answer 1 · 2022-02-07T06:36:23+03:00

Answer:

The answer is A. $870

Explanation:

The lower-of-cost-or-market (LCM) method measures closing or ending inventory at the lower of its cost(historical cost) or its current market cost(replacement cost). This situation arises when inventory has deteriorated, or has become obsolete, or market prices have gone down.

Item 1...... 5 units x $45 = $225

Item 2..... 7 units x $60 = $420

Item 3..... 9 units x $25 = $225

Total......................................$870