Inventories

12 Months Ended

Dec. 31, 2021

Inventories are stated at the lower of cost or net realizable value using the last-in, first-out (“LIFO”) or first-in, first-out (“FIFO”) methods. The Company reduces its inventory value for estimated obsolete and slow-moving inventory in an amount equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

The components of inventories were as follows at December 31, (in millions):


	2021		2020
Raw materials and supplies	$	310	$	252
Work-in-process	167		157
Finished products	1,520		1,229
	$	1,997	$	1,638

Inventory costs include direct materials, direct labor and manufacturing overhead, or when finished goods are sourced, the cost is the amount paid to the third party. Approximately 22.5% and 24.9% of gross inventory costs at December 31, 2021 and 2020, respectively, were determined by the LIFO method; for the balance, cost was determined using the FIFO method. Inventory accounted for under the LIFO method would increase by $90 million and $23 million at December 31, 2021 and 2020, respectively, if the LIFO inventory were valued under the FIFO method. The pre-tax expense from continuing operations recognized by the Company related to the liquidation of LIFO-based inventories were immaterial in 2021 and 2020, and $3 million in 2019.