Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule

Question

Lower of Cost or Market Stiles Corporation uses the lower of cost or market rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows Product A Product B Historical cost Replacement cost Estimated cost of disposal Estimated selling price Required: 1. Assume that Stiles uses the FIFO inventory method. What is the correct inventory value for each product? $80 70 32 150 $96 98 30 120 Product A 80 per unit Product B 90 per unit 2. Assume that Stiles uses the LIFO inventory method. What is the correct inventory value for each product? Product A 66 X per unit Product B 91 X per unit

Explanation / Answer

The Value of Inventory will be same in both cases as there is no information of any opening inventory or purchases or produced or sold...etc There is only information for 1 Unit of each product.

So Inventory value will be same in both cases.

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