Decker Company has five products in its inventory. Information about the December31, 2011, inventory

follows:

Product     Quantity    Unit Cost    Unit Replace Cost   Unit Selling Price

A                  1,000            $10                  $12                           $16

B                   800                15                    11                              18

C                  600                  3                      2                                 8

D                  200                  7                     4                                  6

E                   600                14                   12                                13

The selling cost for each product consists of a 15 percent sales commission. The normal profit

percentage for each product is 40 percent of the selling price.

Required:

1.Determine the balance sheet inventory carrying value at December 31, 2011, assuming the

LCM rule is applied to individual products.

$28,030

2. Determine the balance sheet inventory carrying value at December 31, 2011, assuming the

LCM rule is applied to the entire inventory. Also, assuming that Decker recognizes an inventory

write-down as a separate income statement item, determine the amount of the loss.

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