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 5
units 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...
Ask the Tutor ACCA FA
Ias 2 inventories
5y ago#1Inventories 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!!
5y ago#3You are welcome :-)
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