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Financial Accounting

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Inventory Cost: Lower of Cost or NRV by Total Inventory Cost

FINACT-EWUR1P

Pine Textiles Company has provided the following information at year-end:

Item Item Cost Selling Price Estimated Costs to Sell
Category A
Item 1 \$3,000 \$3,600 \$750
Item 2 \$6,000 \$9,000 \$900
Category B
Item 3 \$15,000 \$16,500 \$1,800
Item 4 \$14,400 \$17,280 \$750
Item 5 \$11,400 \$13,680 \$4,500
Category C
Item 6 \$1,560 \$2,730 \$450
Item 7 \$1,800 \$3,150 \$600


Lower of Cost and Net Realizable Value is an Inventory cost method that companies can apply to individual Inventory items, categories of Inventory or to the total cost of Inventory.

Using the above information, calculate the cost of Inventory that will be reported on the Balance Sheet by Pine Manufacturing at year-end if the Lower of Cost and Net Realizable Value is applied to the total cost of all Inventory items.

A

\$50,490

B

\$52,770

C

\$65,940

D

\$53,160