(Answered) : Data related to the inventories of Copper Medical Supply is presented below: Surgical Equipment Surgical Supplies Rehab Equip

Data related to the inventories of Copper Medical Supply is presented below:
Surgical Equipment Surgical Supplies Rehab Equipment Rehab Supplies
Selling Price 260 120 340 165
Cost 170 90 250 162
Replacement 240 80 235 158
Disposal Cost 30 5 25 10
Normal gross profit ratio 30% 30% 30% 20%
In applying the LCM rule, the inventory of rehab supplies for Cooper Medical Supply would be valued at:

Expert Answer

Upper limit = NRV = (165-10) = 155
Lower limit = (NRV-Normal profit) = (155- (20% of 165) = 122
As per the LCM rule, Replacement cost of 158 does not lies within the LCM limits
Hence, the inventory of rehab supplies for Cooper Medical Supply would be valued at 122 which is the lowest value