Use the lower-of-cost-or-market rule to determine the value (in $) of the following inventory for Save-Mor Merchandisers.
Item	Qty	Cost	Market	Valuation Basis	Amount
Raincoats	470	$84	$54		$
Birdcages	315	60	38
Radios	222	44	45
Calculators	377	17	14
Video Games	467	40	33
Total Value of Inventory
$

The **lower-of-cost-or-market (LCM) rule** is used in inventory valuation to ensure that inventory is not overvalued. Under this rule, each inventory item's value is determined by taking the lower of its cost or its market value.

Let's apply this rule to each item and calculate the total inventory value.

### Calculation:

1. **Raincoats**:
   - Quantity = 470
   - Cost per unit = $84
   - Market value per unit = $54
   - Valuation basis = Lower of cost or market = $54
   - Total amount = $ 470 \times 54 = 25,380 $

2. **Birdcages**:
   - Quantity = 315
   - Cost per unit = $60
   - Market value per unit = $38
   - Valuation basis = Lower of cost or market = $38
   - Total amount = $ 315 \times 38 = 11,970 $

3. **Radios**:
   - Quantity = 222
   - Cost per unit = $44
   - Market value per unit = $45
   - Valuation basis = Lower of cost or market = $44
   - Total amount = $ 222 \times 44 = 9,768 $

4. **Calculators**:
   - Quantity = 377
   - Cost per unit = $17
   - Market value per unit = $14
   - Valuation basis = Lower of cost or market = $14
   - Total amount = $ 377 \times 14 = 5,278 $

5. **Video Games**:
   - Quantity = 467
   - Cost per unit = $40
   - Market value per unit = $33
   - Valuation basis = Lower of cost or market = $33
   - Total amount = $ 467 \times 33 = 15,411 $

### Total Value of Inventory:

\[
25,380 + 11,970 + 9,768 + 5,278 + 15,411 = 67,807
\]

So, the **total value of inventory** under the LCM rule is **$67,807**.

Do you want more details or have any questions?

### Relative Questions:

1. How does the lower-of-cost-or-market rule protect against inventory overvaluation?
2. What are the implications of using LCM on financial statements?
3. Can you explain why the radios were valued at their cost rather than their market price?
4. How would the total inventory value change if the market prices were all higher than the costs?
5. How does the LCM rule differ from other inventory valuation methods like FIFO or LIFO?

### Tip:
When using the LCM rule, always evaluate each item individually rather than as a group to prevent overvaluation or undervaluation of the entire inventory.

Use the lower-of-cost-or-market rule to determine the value (in $) of the following inventory for Save-Mor Merchandisers.
Item    Qty    Cost    Market
Raincoats    470    $84    $54
Birdcages    315    $60    $38
Radios    222    $44    $45
Calculators    377    $17    $14
Video Games    467    $40    $33
Total Value of Inventory: $ ?

Learn how to apply the lower-of-cost-or-market rule to value inventory for Save-Mor Merchandisers. This problem involves calculating the inventory value of raincoats, birdcages, radios, calculators, and video games by using cost and market price comparison. Suitable for students in Grades 9-12.

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