Simmons, Inc. uses lower- of- cost- or- market to value its inventory. Data regarding an item in

Question:

Simmons, Inc. uses lower- of- cost- or- market to value its inventory. Data regarding an item in its inventory is as follows:
Cost …………………………………….. $ 26
Replacement cost ……………………..... 20
Selling price ……………………............. 30
Cost of completion and disposal……….. 2
Normal profit margin…………………… 7
What is the lower- of- cost- or- market for this item?
a. $ 21
b. $ 20
c. $ 28
d. $ 26