Inventory Management Paper 13

Which of the following inventory management approaches orders at the point where carrying costs equate nearest to restocking costs in order to minimize total inventory cost?

In applying LCM, market cannot be:

In applying LCM, market cannot be:

An argument against the use of LCM is its lack of:

Montana Co. has determined its year-end inventory on a FIFO basis to be $600,000. Information pertaining to that inventory is as follows:
selling price: $620,000
disposal cost: 30,000
normal profit margin: 80,000
replacement cost: 520,000
What should be the carrying value of Montana’s inventory?

Data related to the inventories of Costco Medical Supply is presented below:
(surgical equipment, surgical supplies, rehab equipment, rehab supplies)
selling price: (260, 120, 340, 165)
cost: (170, 90, 250, 162)
replacement cost: (240, 80, 235,158)
disposal cost: (30, 5, 25, 10)
normal gross profit ratio: (30%, 30%, 30%, 20%)
In applying the LCM rule, the inventory of surgical equipment would be valued at:

Data related to the inventories of Costco Medical Supply is presented below:
(surgical equipment, surgical supplies, rehab equipment, rehab supplies)
selling price: (260, 120, 340, 165)
cost: (170, 90, 250, 162)
replacement cost: (240, 80, 235,158)
disposal cost: (30, 5, 25, 10)
normal gross profit ratio: (30%, 30%, 30%, 20%)
In applying the LCM rule, the inventory of surgical supplies would be valued at:

Data related to the inventories of Costco Medical Supply is presented below:
(surgical equipment, surgical supplies, rehab equipment, rehab supplies)
selling price: (260, 120, 340, 165)
cost: (170, 90, 250, 162)
replacement cost: (240, 80, 235,158)
disposal cost: (30, 5, 25, 10)
normal gross profit ratio: (30%, 30%, 30%, 20%)
In applying the LCM rule, the inventory of rehab equipment would be valued at:

Data related to the inventories of Costco Medical Supply is presented below:
(surgical equipment, surgical supplies, rehab equipment, rehab supplies)
selling price: (260, 120, 340, 165)
cost: (170, 90, 250, 162)
replacement cost: (240, 80, 235,158)
disposal cost: (30, 5, 25, 10)
normal gross profit ratio: (30%, 30%, 30%, 20%)
In applying the LCM rule, the inventory of rehab supplies would be valued at:

Data related to the inventories of Alpine Ski Equipment and Supplies is presented below:
(skis, boots, apparel, supplies)
selling price: (180,000; 150,000; 120,000; 60,000)
cost: (128,000; 133,000; 90,000; 45,000)
replacement cost: (120,000; 133,000; 110,000; 41,000)
sales commission: (120,000; 130,000; 110,000; 41,000)
normal gross profit ratio: (20%, 20%, 15%, 15%)
In applying the LCM rule, the inventory of skis would be valued at: