A Company Had the Following Ending Inventory Costs Required:
Calculate the Lower of Cost or Market (LCM) Value

question 227

Essay

A company had the following ending inventory costs:
$$\begin{array} { | c | c | r | r | } \hline \text { Product } & \text { Units of Hand } & \text { Unit Cost } & \text { Market Value } \\\hline \text { A } & 10 & \$ 5 &\$ 6 \\\hline \text { B } & 50 & 8 & 7 \\\hline \text { C } & 35 & 10 & 11 \\\hline\end{array}$$ Required:
Calculate the lower of cost or market (LCM) value for each individual item.

---

Definitions:

Value-based Pricing

A pricing approach that sets the cost of a product or service according to its perceived worth to the consumer, rather than the expenses involved in its creation.

Preventive Maintenance

Scheduled maintenance on equipment or systems aimed at preventing unexpected failures or extending their life.

Target Costing

A pricing method that involves identifying the desired profit margin and market price, then working backward to determine the maximum cost that can be incurred on a product.

Return on Investment

An indicator for assessing an investment's effectiveness, determined by dividing the net profit by the investment's total cost.