Boulder,Inc Using the Lower-Of-Cost-Or-Market Rule,compute the Total Valuation for Each Inventory

question 124

Short Answer

Boulder,Inc.is computing its inventory at December 31,2010.The following information relates to the five major inventory items regularly stocked for resale $$\begin{array}{l}\begin{array} { cc} \\\\\text { Item}& \text { Item Ouantity on Hand }\\\mathrm{A} & 100 \\\mathrm{~B} & 150 \\\mathrm{C} & 25 \\\mathrm{D} & 300 \\\mathrm{E} & 700\end{array}\begin{array} { cc } \text { December 31,2009 } & \text { Replacement Cost } \\\text { Unit Cost when } & \text { (Market) at December 31. } \\\text { Acquired (FIFO) } & 2009\\\$ 40 & \$ 35\\\$ 50 & \$ 52 \\\$ 100 & \$ 80 \\\$ 60 & \$ 62 \\\$ 15 & \$ 12\end{array}\end{array}$$


Using the lower-of-cost-or-market rule,compute the total valuation for each inventory item at December 31,2010,and the total inventory valuation.

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Definitions:

Unit Product Cost

The total cost associated with creating one unit of product, including direct labor, direct materials, and allocated overhead.

Raw Materials Cost

The total expense incurred for materials that are used in the manufacturing process to produce goods.

Direct Labor Wage Rate

The amount of money paid to workers for each hour of labor.

Raw Materials Inventory

Stocks of unprocessed materials that are used in the manufacturing process to create finished goods.