Tatum Company has four products in its inventory. Information about ending inventory is as follows:| Product | Cost per Unit | Net Realizable Value per Unit ||---------|--------------|-------------------------------|| A | \$10 | \$12 || B | \$15 | \$13 || C | \$8 | \$9 || D | \$20 | \$18 |Using the lower of cost or net realizable value (LCNRV) rule applied to each item separately, what is the total value of ending inventory?

• A. \$50
• B. \$48
• C. \$47
• D. \$51

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the LCNRV rule. The lower of cost or net realizable value (LCNRV) rule requires that inventory be valued at the lower of its cost or its net realizable value (NRV) for each item separately. NRV is the estimated selling price minus any costs to complete and sell the product.
2. Step 2: Compare the cost per unit and the net realizable value (NRV) per unit for each product. For each product, determine which value is lower.
3. Step 3: Calculate the total value of ending inventory by summing the lower value (either cost or NRV) for each product. For example, for Product A, the lower value is \$10 (cost), and for Product B, the lower value is \$13 (NRV).
4. Step 4: Repeat the comparison and selection process for Products C and D. For Product C, the lower value is \$8 (cost), and for Product D, the lower value is \$18 (NRV).
5. Step 5: Add the selected values for all products to determine the total value of ending inventory. The sum of the lower values for Products A, B, C, and D will give the total inventory value under the LCNRV rule.