Lower-of-cost-or-market comparison

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The Garrett Corporation uses the lower-of-cost-or-market method to value inventory. Data regarding the items in work-in-process inventory are presented below.

Markers Pens Highlighters

Historical cost ................ $24,000 $18,880 $30,000
Selling price .................. 36,000 36,000 36,000
Estimated cost to complete ..... 4,800 4,800 6,800
Replacement cost ............... 20,800 16,800 31,800

Normal profit margin as a percentage of selling price .... 25% 25% 10%

The value for cost to be used in the lower-of-cost-or-market comparison for the markers is:

a. $20,800.

b. $23,400.

c. $24,000.

d. $31,200.

Reference no: EM13148190

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