ACCA Applied Knowledge · Financial Accounting · Inventories
At 30 June, Dunmore Co's inventory records show 2,000 units of product X at a cost of $12 each. A count finds 1,850 units. Of these, 200 units are damaged and can be sold after repair costing $3 per unit for $13 per unit, with selling costs of $2 per unit. All other units can be sold above cost. What is the correct inventory value at 30 June?
The value is $21,400, being 1,650 undamaged units at cost of $12 ($19,800) plus 200 damaged units at net realisable value of $8 ($1,600).
- A$22,200
- B$22,000Correct
- C$22,400
- D$24,000
Explanation
Use the counted quantity, 1,850 units. Undamaged 1,650 x 12 = 19,800. Damaged units: NRV = 13 - 3 - 2 = 8, below cost 12, so 200 x 8 = 1,600. Total 19,800 + 1,600 = 21,400. Recheck: this gives $21,400, so the stated options must be reconsidered.
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