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 $110 million as of June 30, 2016 and $138 million as of December 31, 2015. If the average cost method had been used, total inventories would have been $18 million higher than reported as of both June 30, 2016 and December 31, 2015. The cost of the remaining inventory was recorded using the average cost method. Inventories consisted of the following:



Millions of dollars	June 30, 2016		December 31, 2015
Finished products and parts	$	1,662	$	1,992
Raw materials and supplies	885		879
Work in process	103		122
Total	$	2,650	$	2,993

As a result of the continued downturn in the oil and gas industry and its corresponding impact on our business outlook, we recorded inventory write-downs as the cost of some of our inventory exceeded its market value. See Note 3 for further information about impairments and other charges.

Finished products and parts are reported net of obsolescence reserves of $247 million as of June 30, 2016 and $251 million as of December 31, 2015.