Stellar Inc

question 48

Multiple Choice

Stellar Inc.carries Product A in inventory on December 31 at its unit cost of $22.50.Because of a sharp decline in demand for the product,the selling price is reduced to $24.00 per unit.Stellar's normal profit margin on Product A is $4.80,disposal costs are $3.00 per unit,and the replacement cost is $15.90.Under the rule of lower of cost or market,Stellar's December 31 inventory of Product A should be valued at a unit cost of

• A) $15.90.
• B) $16.20.
• C) $21.00.
• D) $22.50.