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In Kaplan, it is saying that unit cost method is used when inventory is of high value. Can you explain please?
This is not a rule – inventory can be valued at any of the ways described in my free lectures.
However when inventories are of high value (such a expensive dresses in an expensive clothes shop) it may be more sensible to use the unit cost approach. I do explain this in my lectures.
Hello sir!!!
My question is:
Edward co. Purchased some raw material inventory from a supplier at a list price of 6,000$. It got a settlement discount of $500 on this purchase.
The raw materials have been converted into finished goods inventory by the process. The process cost $5,500 made up of $3,000 direct labor, $1,300 electricity cost, $500 attributable production overheads and $700 share of post-production storage cost. The finished goods will be sold for $14,000 after incurring selling cost of 10%.
What is the value of finished goods inventory to be shown in Edward co.’s financial statement ?Please give me the answer and also tell me that what is post – production storage cost ?
Please do not simply type out full questions and expect to be provided with a full answer,
You must have an answer to this question in the same book in which you found the question, and so ask about whatever it is in the answer that you are not clear about and then I will explain.
Post-production storage cost is the cost of keeping the goods in the stores after they have been produced.
I assume that you have watched my free lectures on the valuation of inventories?
Ok sir thank you very much
From now onward I will tell you answer too but my answer is 9000$.
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