Response to the following questions:
1. Use LCM applied separately to the following individual items to compute ending inventory
Product Units Unit Recorded Cost Unit Market Cost
A . . . . . . . . . . . 20 $ 6 $ 5
B . . . . . . . . . . . 40 9 8
C . . . . . . . . . . 10 12 15
2. Why are incidental costs sometimes ignored in inventory costing? Under what accounting constraint is this permitted?
3. If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of goods sold? Why?