Lower of Cost or Market Rule Can Be Applied to Periodic

question 59

Essay

Lower of cost or market rule can be applied to periodic inventory. What are the two methods? Which one requires an entry to the loss due to market valuation account?

---

Definitions:

Volume Overhead Variances

The differences between the expected fixed overhead costs and the actual fixed overhead allocated, based on the volume of production.

Optimum Standards

Ideal benchmarks set for performance, quality, or efficiency that are considered best under the given conditions.

Attainable Standards

Realistic targets for costs or productivity set by management, which are challenging yet achievable under normal working conditions.

Materials Quantity Variance

The deviation of the actual materials used from the expected standard quantity in production, times the standard unit cost.