Leary chemical manufactures three chemical: a, b, and c. these chemicals are produced via two production processes: 1 and 2. running process 1 for an hour costs $4 and yields 3 units of a, 1 unit of b, and 1 unit of c. running process 2 for an hour costs $1 and produces 1 unit of a and 1 of b. to meet customer demands, at least 10 units of a, 5 of b and 3 of c must be produced daily. leary chemical’s wants to minimize the cost of production while meeting the daily demand

Example1 lcnrv: ted company uses the lower of cost or nrv method in valuing its inventory items. the inventory at december 31, 2017, consists of products a, b and c, each having 1,000 units. relevant unit data for these products appear below: item a item b item c cost $ 80 $80 $80 estimated selling price 180 100 90 estimated selling cost 30 30 30 required: using the lower of cost or net realizable value rule, determine the proper value of inventory for balance sheet reporting purposes at december 31, 2017. prepare any necessary journal entry. apply the lower of cost or nrv method: • on an individual inventory basis; • on a group basis; • on a total inventory basis. solution worksheet: inventory (on an individual basis): inventory value item nrv cost lc- item a item b item c total inventory (on a group basis): inventory value item nrv cost lc- group 1 (item a and b) group 2 (item c) total inventory (on an aggregate inventory basis): inventory value item nrv cost lc- total inv