Cost of inventories INVENTORIES

Chapter 6 – Inventories Page 82 6. How should sales staff commission be dealt with when valuing inventories at the lower of cost and net realisable value NRV, according to IAS2 Inventories? select one answer A Added to cost B Ignored C Deducted in arriving at NRV D Deducted from cost 7. How should trade discounts be dealt with when valuing inventories at the lower of cost and net realisable value NRV according to IAS2 Inventories? select one answer A Added to cost B Ignored C Deducted in arriving at NRV D Deducted from cost 8. Are the following statements true or false, according to IAS2 Inventories? 1 Cost of factory management should be included in the cost of inventory. 2 Maintenance expenses for an item of equipment used in the manufacturing process should be included in the cost of inventory. Statement 1 Statement 2 A False False B False True C True False D True True Chapter 6 – Inventories Page 83 9. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: CU Materials 70 Storage costs of finished goods 18 Delivery to customers 4 Irrecoverable purchase taxes 6 According to IAS2 Inventories, at what figure should the item be valued in inventory? A CU88 B CU76 C CU98 D CU94 10. The Parrotbill Company produces units of product UB06. The following costs have been incurred: CU per unit Direct materials and labour 1.80 Variable production overhead 0.25 Factory administrative costs 0.15 Fixed production costs 0.20 Under IAS2 Inventories, what is the correct inventory value of a unit of product UB06? A CU2.05 B CU2.25 C CU1.95 D CU2.40 Chapter 6 – Inventories Page 84 11. The Hopkins Company is a manufacturing company. The cost per unit of an item of inventory is shown on its card as follows: CU Materials 30 Production labour costs 33 Production overheads 12 General administration costs 10 Marketing costs 5 According to IAS2 Inventories, what is the value of one completed item of inventory in Hopkinss statement of financial position? A CU63 B CU85 C CU75 D CU90 12. The Motmot Company has partially-completed inventory located in its factory, to which the following estimates relate: CU Production costs incurred to date 2,900 Production costs to complete 2,000 Transport costs to customer 300 Future selling costs 400 Selling price 2,800 According to IAS2 Inventories, what is the net realisable value of Motmots inventory? A CU2,100 B CU2,800 C CU400 D CU100