Wilson Animal Feeds has developed the following data to calculate lower of cost or market for its products. Large animals:
Cattle $320 $160
Horse 400 400
Small animals:
Cat $360 $320
Dog 120 90
Exotic pets:
Ferret $140 $112
Iguana 70 48

The costs to sell are 20% of selling price.

Required:
Determine the reported inventory value assuming the lower of cost and net realizable value rule is applied to classes of feeds.

The total reported inventory value is $1,130.

Explanation:

Note: The data given the question are sorted and presented properly as follows:

                                     Selling Price              Cost    

Large animals:                  

Cattle                                     $320                    $160

Horse                                      400                      400

Small animals:

Cat                                         $360                  $320

Dog                                          120                       90

Exotic pets:

Ferret                                     $140                    $112

Iguana                                       70                      48

Based on the lower of cost and net realizable value rule, we select the lower and determine the reported inventory value as follows:

Details                                        Value ($)  

Large animals:

Cattle                                            160

Horse                                            400

Small animals:

Cat                                                320

Dog                                                90

Exotic pets:

Ferret                                             112

Iguana                                            48    

Total value                                  1,130  

Therefore, the total reported inventory value is $1,130.