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13 March, 14:32

A company's normal selling price for its product is $30 per unit. However, due to market competition, the selling price has fallen to $25 per unit. This company's current inventory consists of 300 units purchased at $26 per unit. Replacement cost has fallen to $23 per unit. Calculate the value of this company's inventory at the lower of cost or market.

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  1. 13 March, 14:44
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    value of this company's inventory at the lower of cost or market is $6,900

    Explanation:

    given data

    selling price = $30 per unit

    selling price fall = $25 per unit

    current inventory consists = 300 units

    purchased = $26 per unit

    Replacement cost fall = $23 per unit

    solution

    As we know Under Cost or Market Price here lower price is Net realizable value is

    lower price is Net realizable value = $23

    so that value of company's inventory at the lower of cost will be

    value of company's inventory = lower price is Net realizable value * Units in the inventory ... 1

    put here value and we get

    value of company's inventory = $23 * 300

    value of company's inventory = $6,900
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