The Garrett Corporation uses the lower-of-cost-or-market method to value inventory. Data regarding the items in work-in-process inventory are presented below.
Markers Pens Highlighters
Historical cost ................ $24,000 $18,880 $30,000
Selling price .................. 36,000 36,000 36,000
Estimated cost to complete ..... 4,800 4,800 6,800
Replacement cost ............... 20,800 16,800 31,800
Normal profit margin as a
percentage of selling price .... 25% 25% 10%
The value for cost to be used in the lower-of-cost-or-market comparison for the markers is
a. $20,800.
b. $23,400.
c. $24,000.
d. $31,200.