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Sir, this a question I got on a mock exam I did and I have been trying to answer it for the past few hrs and I have no results…
S & Co sell three products – Basic, Super and Luxury. The following information was available at the year end.
Basic($ per unit) Super($ per unit) luxury($ per unit)
Original cost 10 9 20
Estimated selling price 9 12 26
Selling and distribution costs 1 4 5units units units
units of inventory 500 1250 850
I got the answer as $31,850 but it was marked as wrong….
Would much appreciate it if you could help me with this method sir…
Thank you…Inventories are valued at the lower of cost and net releasable value.
Therefore Basic are valued at $8 (9 – 1); Super are valued at $8 (12 – 4); and Luxury are valued at $20 ($20 is lower than the NRV)
Therefore the total value is (500 x $8) + (1,250 x $8) + (850 x $20) = $31,000.
I do not know how you arrived at the figure of $31,850.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Ok thank you very much sir,
I did go thru the lectures once but I will go through them again…
Thank you once again!!
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