NOTE 6 Inventories

The Company acquired a significant amount of repossessed pre-owned inventory in 2011. The Company will continue to sell the remaining pre-owned inventory and monitor and reduce, if necessary, the value of this inventory if circumstances so indicate in future periods. The Company could experience additional losses on the disposition of these homes beyond the level of the reserve recorded by the Company.

A breakdown of the elements of inventory at October 31, 2015 and November 1, 2014 is as follows:


	October 31, 2015			November 1, 2014
Raw materials	$	721,751		$	622,831
Work-in-process		113,891			114,368
Finished homes		5,114,568			4,722,923
Model home furniture and others		69,495			56,418

Inventories, net	$	6,019,705		$	5,516,540

Pre-owned homes *	$	5,516,272		$	6,322,483
Inventory impairment reserve		(1,425,108	)		(1,772,280	)

		4,091,164			4,550,203
Less homes expected to sell in 12 months		(1,366,974	)		(2,839,203	)

Pre-owned homes, long-term	$	2,724,190		$	1,711,000

*	The following table summarizes a breakdown of pre-owned homes inventory for fiscal year 2015 and 2014:


	Total pre-owned homes
Balance at November 2, 2013	$	9,215,590
Purchased		525,436
Sold		(3,418,543	)

Balance at November 1, 2014		6,322,483
Purchased		932,197
Sold		(1,738,408	)

Balance at October 31, 2015	$	5,516,272

An analysis of the inventory impairment reserve at October 31, 2015 and November 1, 2014 is as follows:


	October 31, 2015			November 1, 2014
Beginning inventory impairment reserve	$	1,772,280		$	2,711,595
Less: Reductions for homes sold		(258,001	)		(691,094	)
Inventory holding costs		(141,468	)		(211,334	)
Plus: Additions (subtractions) to impairment reserve		52,297			(36,887	)

Ending inventory impairment reserve	$	1,425,108		$	1,772,280