The inventory of 3T Company on December 31, 2014, consists of the following items.
| Part No. |
Quantity |
Cost per Unit |
Cost to Replace per Unit |
| 110 |
620 |
$125 |
$139 |
| 111 |
1,000 |
83 |
72 |
| 112 |
590 |
111 |
106 |
| 113 |
290 |
236 |
250 |
| 120 |
420 |
285 |
289 |
| 121 |
1600 |
22 |
19 |
|
| 122 |
380 |
334 |
327 |
a Part No. 121 is obsolete and has a realizable value of $0.70 each as scrap.
(a) Determine the inventory as of December 31, 2014, by the lower-of-cost-or-market method, applying this method directly to each item.
(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.