Abstract The difficulty many students experience in applying ceiling and floor limitations in the pricing of inventory items at the lower of cost or market has been the subject of discussion at a conference "Teachers' Clinic" at the Auburn University, Auburn, Alabama in July 1964. Students should not experience any difficulty in computing the ceiling and floor in the typical exercise in which the estimated selling price, costs of completion and disposal, and normal profit margin are given. But the selection of the appropriate inventory value from four possible choices; cost, market, ceiling, and floor; can be a confusing number game to students. If these four items are arranged with their values in descending numerical order, the third value will be the correct answer under most circumstances. This rule stems from a logical analysis of the selection process involving the relationship of values and limitations imposed by the ceiling and the floor. The article discusses this rule in dealing with cost accounting for inventories.
Maurice A. Hartman (Sat,) studied this question.