Re Company Prepared the Following Analysis of Its Year-End Inventory

question 22

Essay

Re Company prepared the following analysis of its year-end inventory at June 30th:
$\begin{array}{llll}&&\underline { \text { Histonical Cost }}&\underline { \text { Replacement Cost }}\\\underline { \text {Product }}&\underline { \text {Quantity}}&\underline { \text { per unit }}&\underline { \text { per unit }} \\\mathrm{A} & 17 & \$ 430 & \$ 499 \\\mathrm{~B} & 140 & 325 & 299 \\\mathrm{C} & 38 & 75 & 69\end{array}$ Determine the lower of cost or market value for each product in Re Company's inventory and prepare the journal entry needed at year-end to value the inventory at LCM.

---

Definitions:

Natural Monopoly

A market structure where a single supplier is most efficient due to high fixed or start-up costs, often in industries like utilities.

Economies of Scale

The financial benefits businesses receive from their operational scale, where the cost for each unit produced tends to decrease as the scale of production increases since fixed costs are allocated over a greater quantity of output.

Preemption

A strategy or action taken to prevent an opponent from taking an action by being the first to act or by securing a strategic advantage.

Payoff Matrices

A table that shows the potential outcomes or payoffs in a game for each combination of players' strategies.