Answer :
Because item B's net realisable value is less than its cost by $75 (or $625 minus $550),
The following adjustment will be made in connection with the April 30 lower of cost and net realisable value:
Cost of Products Sold
75 Inventory
What is inventories cost?
All costs related to placing orders, maintaining inventories, and controlling stock levels in a product-based business are included in inventory costs. Ordering costs, carrying costs, and stockout costs are the three main categories into which total inventory costs are often divided.
Cost of keeping inventory equals capital costs plus service costs plus risk costs plus rent expenses. The costs of inventory times the quantity of stock on hand equals the overall value of your inventory. The sum of inventory expenses x the available item stock equals the total inventory value.
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