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Valuing inventories using net realisable value method requires managers to:
A) estimate sales value of the components of the merchandise, less any anticipated conversion costs.
B) estimate costs of the merchandise based on the most recent job cost sheets.
C) estimate sales value of the merchandise less any anticipated costs of completing and selling the products.
D) estimate sales value of the merchandise, disregarding any anticipated costs of completing and selling the products.
Net Realisable Value
The estimated selling price of an asset in the ordinary course of business minus any costs associated with its sale or disposal.
Conversion Costs
The combined costs of direct labor and manufacturing overheads incurred in converting raw materials into finished goods.
Job Cost Sheets
Documents that record and track the direct materials, direct labor, and manufacturing overhead costs allocated to an individual job or project.
- Recognize the principles of inventory valuation and the implications of different valuation methods.
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Learning Objectives
- Recognize the principles of inventory valuation and the implications of different valuation methods.
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