The Whimbrel Company has two products in its inventory which have costs and selling prices per unit as follows:
Product X, Product Y
Selling price: 200, 300
Materials and conversion costs: 150, 180
General administration costs: 30, 80
Selling costs: 60, 70
Profit/-loss: -40, -30
At the year end, the manufacture of items of inventory has been completed but no selling costs have yet been incurred.
According to IAS2 Inventories, should these products be carried in Whimbrel's statement of financial position at cost or net realisable value (NRV) rule?
Product X: Product Y
1. NRV : NRV
2. NRV : Cost
3. Cost : NRV
4. Cost : Cost
According to IAS 2 Inventories, which of the following costs should be included invaluing the inventories of a manufacturing corporation?1. Transportation in2. Transportation out3. Depreciation of factory building4. General administrative expensesa. 1, 2 and 4 onlyb. 2 and 3 onlyc. 1 and 3 onlyAnswer: Letter c. 1 and 3 onlyClarifications: The reason why letter a and b are not the correct answer because
According to AS-2, which of the following costs should be included in valuing the inventories of a manufacturing company?
(A) Freight and insurance
(B) Carriage outwards
(C) Depreciation of factory plant
(D) General administrative overheads
Choose the most appropriate answer from the options given below:
- A and D only
- A, B and D only
- B and C only
- A and C only
Answer (Detailed Solution Below)
Option 4 : A and C only
Free
Teaching Aptitude Mock Test
10 Questions 20 Marks 12 Mins
The correct answer is A and C only
The objective of this standard is to formulate the method of computation of cost of inventories/stock, to determine the value of closing stock/ inventory at which, the inventory is to be shown in balance sheet till its’ sale and recognition as revenue.
In Inventory Cost should include all:
- costs of purchase (including taxes, transport, and handling) net of trade discounts received
- costs of conversion (including fixed and variable manufacturing overheads) including depreciation of factory plant
- other costs incurred in bringing the inventories to their present location and condition including freight and insurance
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Related Question
Overhead cost is to be distributed among manufacturing; selling and administration in the ratio of distributed to these departments? If the total cost was S13,489,how should it be Department Cost Manufacturing Selling Administration (Simplify your answers )
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Video Transcript
Hello students with the answer to this question is total cost is equal to total cost is equal to $13489. Manufacturing. Manufacturing ratio. Sailing ratio. Administration Adminis creation is equal to One divided by 12 ratio two divided by five ratio 3 divided by then. So now first we will write that issue in simplest form, right? The ratio in simplest form and take L C. M. So L C M is equal to 60 now one divided by 12 gives one multiply by five divided by 12. Multiply by five is equal to five divided by 60 two divided by 15. 2 divided by five. Gives to multiply by 12 divided by five. Multiply by 12 is equal to 24, divided by 63, divided by 10 gifts. three multiply by six Divided by 10. multiply by six is equal to 18 divided by 60. Now the issue becomes The ratio becomes five. They shoot 24 ratio 18. Hence manufacturing, we will get manufacturing we will get us 13489. Multiply by five divided by five added to 24 added to 18, Which is equal to 1349. multiply by five, divided by 47 which is equal to 1435 dollars. Sailing we will get sailing we will get Is 1349. Multiply by 24 Divided by five added to 24 added to 18 is equal to 13489. Multiply by 24 divided by 47 which is equal to 6, 8 dollars. Now administration we get administration. V. Get is 13489. Multiply by 18, divided by five added to 24 added to 18 is equal to 13489. Multiply by 18 divided by 47, which is equal to $5166. So this is our administration. So these are your answers. I hope you like these answers. Thank you.