A company's normal selling price for its product is $23 per unit. However, due to market competition, the selling price has fallen to $18 per unit. This company's current inventory consists of 170 units purchased at $19 per unit. Replacement cost has fallen to $16 per unit.

Calculate the value of this company's inventory at the lower of cost or market.

$2.720

Explanation:

Under the inventory at the lower of cost or market method, we value inventory by taking the lowest value, either market, or cost. In this case, the cost, or replacement cost, is lower than the market value, so the value of the inventory will be found by multiplying the units by the replacement cost:

170 units x $16 per unit  = $2.720

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: