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Applying the lower of cost or market method, the reported value of this company's ending inventory if LCM is applied to individual items is _____.

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Answer: $870

Explanation:

Using the lower of cost or market method, the prices the items will be recorded at will be:

  • Item 1 = $45 market price
  • Item 2 = $60 cost price
  • Item 3 = $25 market price

The total inventory will therefore be:

= Total value of item 1 + total value of item 2 + total value of item 3

= (45 * 5) + (60 * 7) + (9 * 30)

= 225 + 420 + 225

= $870

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