Using the following data, determine the value of inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Assume expenses of \$2 per unit are expected to be incurred in selling the inventory.

• A. \$1,160
• B. \$1,120
• C. \$1,086
• D. \$1,076

Answer: (D)

Verified step by step guidance

1. Identify the cost and the market value for each inventory item. The cost is given as 'Cost per Unit' and the market value is the 'Estimated Selling Price' minus the selling expenses of \$2 per unit.
2. For item TR301, calculate the market value by subtracting the selling expenses from the estimated selling price: \$42 - \$2 = \$40.
3. Compare the cost and market value for item TR301. The cost is \$39, and the market value is \$40. The lower of the two is \$39.
4. For item QT314, calculate the market value by subtracting the selling expenses from the estimated selling price: \$100 - \$2 = \$98.
5. Compare the cost and market value for item QT314. The cost is \$110, and the market value is \$98. The lower of the two is \$98.