hi i just want to know do we include cost to enable the sale when we value the cost of inventory. thanks
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FAcost of inventory
15y ago#1Inventory should be valued at the lower of cost and net realisable value.
Cost includes all costs needed to get the inventory to its present location and condition so could include material cost, the cost of carriage inwards, labour needed to manufacture the inventory and a share of production overheads. It would NOT include any costs to do with future sale of the product.
Net Realisable Value is the final or estimated selling price less all further costs of completion and sale. That would therefore have a deduction for future selling costs.
HTH
Cost includes all costs needed to get the inventory to its present location and condition so could include material cost, the cost of carriage inwards, labour needed to manufacture the inventory and a share of production overheads. It would NOT include any costs to do with future sale of the product.
Net Realisable Value is the final or estimated selling price less all further costs of completion and sale. That would therefore have a deduction for future selling costs.
HTH
thanks that is really helpful
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