The standard explanation of the LCM Rule does not stress the application of accounting concepts because the definition of loss implicit in the rule shifts as different valuation bases are selected under the rule. Cost may be compared with replacement cost, with net realizable value, or with net realizable value less normal profit. Without any singular concept of what is being measured as a loss under the rule, students are routinely presented with an inadequately explained rule. The objectives of the rule can become obscure when there is no clear understanding of what the rule is attempting to measure. This paper presents an analysis and critique of the LCM Rule through the use of a graphical approach. The critical relationship between input and output prices is illustrated and the application of a consistent loss concept is stressed.