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Bumi had 120 units of an item in inventory which were purchased some time ago at a cost of $1,200. Immediately before the end of the financial year 20 units were sold for $180. Shortly after the year end a further 20 units were sold for $170 with $20 being incurred in delivering the items to the customer. At what amount should the items in inventory at the end of the financial year be included in the financial statements?
Hi, sir, pls help me to solve this problem, correct answer is A, but i can’t get this figure
The cost of the inventory was $1,200 / 120 = $10 per unit.
The net realisable value is (170 – 20) / 20 = $7.50 per unit.
20 units were sold before the year end, so the number left in inventory at the end of the year was 100 units.
Since the NRV is lower than the cost, the 100 units will be valued at $7.50 per unit.