Han Company has three products in its ending inventory. Specific per unit data at the end of the year for each of the products are as follows: Cost Replacement cost Selling price Selling costs Normal profit Product 1 2 3 S Cost Product 1 $24 22 44 Required: What unit values should Han use for each of its products when applying the lower of cost or market (LCM) rule to ending inventory? 24 $ 94 54 7 9 Replacement cost Product 2 $94 89 124 37 34 22 89 44 Product 3 $ 54 44 66 NRV 11 16 NRV minus NP Market Per Unit Inventory Value

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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.