[This is a variation of BE 9?2, modified to focus on the lower of cost or market.] SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows:

Determine the carrying value of SLR?s inventory assuming that the lower of cost or market (LCM) rule is applied to individual products. What is the before-tax income effect of the LCM adjustment?

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Product 1 Product 2 Cost $50 48 $34 26 Replacement cost 70 Selling price Selling costs Normal profit 36 4 10