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The Ikida Company normally sells its inventory at a 20% profit margin on sales. In...

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Accounting

The Ikida Company normally sells its inventory at a 20% profit margin on sales. In 2006, the net realizable value of inventory purchased for $50,000 declined to $48,000. There are no costs to complete and dispose of this inventory. What is the floor constraint on the valuation of this inventory, using the lower of cost or market rule?

a.

$48,000

b.

$38,400

c.

$50,000

d.

$40,000

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