2. INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Inventories consist of the following:

	December 31, 2013		March 31, 2013
	(in thousands)
Raw materials	$	915	$	932
Work in process	303		330
Finished goods(1)	3,812		2,164
Supplies	200		262
	$	5,230	$	3,688

(1) Net of reserve for obsolescence of $6,000 and $9,000 at December 31, 2013 and March 31, 2013, respectively.

The Company recognizes abnormal production costs, including fixed cost variances from normal production capacity, as an expense in the period incurred. Non inventoriable fixed costs of $44,000 were charged to cost of sales during the three months ended December 31, 2013. There were no abnormal production costs charged to cost of sales for the three and nine months ended December 31, 2013. Approximately $161,000 and $875,000 of abnormal production costs were charged to cost of sales for the three and nine months ended December 31, 2012.