Data related to the inventories of kimzey medical supply are presented below: surgical surgical rehab rehab equipment supplies equipment supplies selling price $ 260 $ 120 $ 340 $ 165 cost 170 90 250 162 replacement cost 240 80 235 158 costs to sell 30 5 25 10 normal gross profit ratio 30 % 30 % 30 % 20 % in applying the lower of cost or market rule, the inventory of surgical equipment would be valued at:

$170

Explanation:

Kimzey Medical Supply's merchandise inventory:

                  Surgical equip.  Surgical supplies  Rehab equip.  Rehab  supplies

Selling price          $260              $100                   $340                    $165

Cost                        $170               $90                    $250                    $162

If we apply the lower of cost or market rule for determining the value of surgical equipment, its value would be: $170 < $260

When we use the lower of cost or market rule, we should value our inventory at the lowest value between original purchase cost and current price.

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