The company sells three products - S, M and L. The following information was available at the year end.
S | M | L | |
$ per unit | $ per unit | $ per unit | |
Original cost | 1 | 9 | 9 |
Estimated Selling Price | 4 | 12 | 11 |
Selling and distribution costs | 0 | 9 | 10 |
Units | Units | Units | |
Units of inventory | 500 | 600 | 100 |
What is the value of inventory at the year end?
SUGGESTED SOLUTIONS
S | M | L | |
$ per unit | $ per unit | $ per unit | |
Original cost | 1 | 9 | 9 |
Units of inventory | 500 | 600 | 100 |
Valuation based on Original cost | 500 | 5,400 | 900 |
Estimated Selling Price | 4 | 12 | 11 |
Selling and distribution costs | 0 | 9 | 10 |
Net Selling price | 4 | 3 | 1 |
Units of inventory | 500 | 600 | 100 |
Valuation based on Net Realisable Value | 2,000 | 1,800 | 100 |
Lower of cost or Net Realisable Value | 500 | 1,800 | 100 |
Answer | 2,400 |