Problem Two: Lower-of-Cost-or-Net Realizable Value

The following information is from Gianni Company's individual inventory items as of December 31, 2020.

Inventory

Quantity

Cost per Unit

Net Realizable Value per Unit

Classification: Premium

Item 1

256

$180

$185

Item 2

480

100

98

Item 3

640

165

175

Item 4

448

158

120

Classification: Classic

Item 5

320

100

98

Item 6

160

90

95

Item 7

1,600

105

115

Item 8

896

80

75

Required

a. Calculate lower-of-cost-or-net realizable value of Gianni's inventory at December 31, 2020, applying the rule to the individual items.

b. Calculate lower-of-cost-or-net realizable value of Gianni's inventory at December 31, 2020, applying the rule to the inventory classifications.

c. Calculate lower-of-cost-or-net realizable value of Gianni's inventory at December 31, 2020, applying the rule to total inventory.