The Following Information Concerns Several of the Inventory Items at DC's

question 52

Short Answer

The following information concerns several of the inventory items at DC's. $$\begin{array} { | c | c | c | c | } \hline \text { Description } & \text { Quantity } & \text { Unit Cost } & \text { Market Value } \\\hline \text { Department A: } & & & \\\hline \text { Model XP 235 } & 50 & \$ 22.90 & \$ 21.50 \\\hline \text { Model XP 376 } & 75 & 26.75 & 25.00 \\\hline \text { Model XP 522 } & 60 & 20.00 & 21.00 \\\hline \text { Department B: } & & & \\\hline \text { Model ZY 114 } & 15 & 75.00 & 75.00 \\\hline \text { Model ZY 232 } & 24 & 100.00 & 92.00 \\\hline \text { Model ZY 183 } & 12 & 145.00 & 142.50 \\\hline\end{array}$$ Determine the amount of inventory to be reported on the financial statements using the lower of cost or market method of valuation under each of the following options.
1. Lower of cost or market for each item separately
2. Lower of total cost or total market
3. Lower of total cost or total market by department

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Definitions:

National Income

The total money earned within a country from economic activities in a specific period, typically a year.

Profits

The financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the operation.

Economic Rents

Earnings in excess of the minimum amount required to keep a resource in its current use, often due to scarcity or monopolistic control.

Accrue

The accumulation or increase of something over time, especially payments or benefits.