Question 1

Section A

CircuitWorks manufactures specialized electronic components. At year-end, they have 1,000 units of 'Component X' in inventory. The manufacturing cost was $15 per unit. Due to a recent technological shift, these components can now only be sold for $12 per unit, and CircuitWorks must pay a $2 per unit packaging and delivery cost to finalize the sale.

What is the total value of 'Component X' that should be included in the closing inventory? (Enter the number only, no dollar sign)

Accepted Answer

Calculate Cost and Net Realizable Value (NRV) per unit. Inventory is valued at the lower of Cost and NRV. Multiply the lower value by the number of units.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Valuing at cost ($15,000) or forgetting to deduct the selling costs from the selling price ($12,000).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 5

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