Inventories

Inventories are stated at the lower of cost or market value. In the United States, we manufacture certain finished products and parts inventories for drill bits, completion products, bulk materials, and other tools that are recorded using the last-in, first-out method, which totaled $155 million as of March 31, 2013 and $139 million as of December 31, 2012. If the average cost method had been used, total inventories would have been $39 million higher than reported as of March 31, 2013 and $41 million higher than reported as of December 31, 2012. The cost of the remaining inventory was recorded on the average cost method. Inventories consisted of the following:



Millions of dollars	March 31, 2013		December 31, 2012
Finished products and parts	$	2,301	$	2,264
Raw materials and supplies	828		793
Work in process	128		129
Total	$	3,257	$	3,186

Finished products and parts are reported net of obsolescence reserves of $123 million as of March 31, 2013 and $114 million as of December 31, 2012.