Use the Following Information to Answer Questions
Handel Inc

question 38

Multiple Choice

Use the following information to answer questions
Handel Inc.values its inventory on an LCM basis.The following data came from the 2011 inventory, which consisted of two items: $\begin{array}{lrr}&\text { Item \# 130}&\text { Item \# 140 }\\\hline\text { Original cost } & \$ 12,000 & \$ 15,000 \\\text { Selling price } & 15,000 & 26,000 \\\text { Estimated selling costs } & 5,000 & 10,000 \\\text { Replacement cost } & 13,000 & 15,000 \\\text { Normal profit margin } & 1,500 & 1,000\end{array}$
-The appropriate carrying value for the entire inventory when applying the LCM rule using net realizable value to the inventory as a whole would be:

• A)$25,000
• B)$26,000
• C)$27,000
• D)$28,000

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Definitions:

Market Neutral

An investment strategy that seeks to avoid some forms of market risk by taking matching long and short positions in different stocks to increase the potential for absolute returns.

Relative Value

A measurement that assesses the worth of an asset by comparing it with the value of similar assets.

Incentive Fees

Fees charged by a fund manager based on the fund's performance, usually a percentage of the investment's earnings above a specified benchmark.

Portfolio Return

The overall gain or loss generated by the collection of investments held by an individual or institution, measured over a specific period.