Landers Company has 9 units in inventory on December 31. The units were purchased in November for $180 each. The price lists from suppliers indicate the current replacement cost of the item to be $178 each. What is the effect on gross profit if Landers values its ending merchandise inventory using the lower-of-cost-or-market rule?
A) The gross profit would increase by $2.
B) The gross profit would not be affected.
C) The gross profit would decrease by $18.
D) The gross profit would increase by $18.
C) The gross profit would decrease by $18.
Explanation:
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