Gracia Company uses the lower of cost or net realizable value method to value inventory. Data regarding the items in work in process inventory are presented below: Markers Pens Highlighters Historical cost 240,000 188,000 300,000 Selling price 360,000 250,000 360,000 Estimated cost to complete 480,000 50,000 68,000 Replacement cost 208,000 168,000 318,000 Normal profit margin as a percentage of selling price 25% 25% 10% What is the measurement of the work in process inventory?

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.