Answer : $ 170

The working notes for the above figure is as follow

we have been provided with the information that

selling price: 260

Cost $ 170

Replacement cost $ 240

Disposal cost $ 30

Gross profit 30%

inventory of surgical equipment would be valued at by applying LCM

Lower of cost or market(LCM) is an accounting rule for valuing inventory and, under certain conditions, securities holdings. Under the lower of cost or market rule, the reported value of inventory or eligible securities at the end of an accounting period is the lower of either (a) cost or (b) value in the market.

The “lower of cost or market” rule is used for adjusting the balance sheet value of certain inventories and securities assets when the market value of these assets changes

So in the prasent case it will be $ 170