The Warren Company Uses the Perpetual Inventory System and Has

Short Answer

The Warren Company uses the perpetual inventory system and has computed the cost of its inventory to be $12,800 as follows: 200 units of Product A at a unit cost of $20;300 units of Product B at a unit cost of $24;and 100 units of Product C at a unit cost of $16.The current replacement cost of each of the above items is $25,$22 and $14,respectively.Warren's accountant is not sure yet whether to apply the lower-of-cost-or-market rule by individual items or by the entire stock in aggregate.Indicate whether each of the following statements pertaining to the Warren Company is true or false.
_____ a)When referring to Product B,the "cost" totals $7,200.
_____ b)If Warren selects to apply the lower-of-cost-or-market rule by individual items,Product A would be listed at $25 per unit.
_____ c)Warren would record a write-down of inventory it is uses the individual items approach,but would not have a write-down if it uses the aggregate approach.
_____ d)If Warren uses the individual items approach,$12,000 will be reported for inventory on the balance sheet.
_____ e)For Product C,the lower of cost or market is $1,600.