Given the Following Account Balances at the End of the First

question 64

Multiple Choice

Given the following account balances at the end of the first year of operations: $$\begin{array} { l r } \text { Direct materials inventory } & \$ 60,000 \\\text { Work in process inventory } & 120,000 \\\text { Finished goods inventory } & 180,000 \\\text { Cost of goods sold } & 600,000 \\\text { Direct material price variance } & 65,000 \mathrm { U } \\\text { Direct material efficiency } & 195,000 \mathrm {~F}\end{array}$$ Assuming that variances are considered material, the entry and amount of the direct material efficiency variance allocated to work in process inventory is:

• A) Credit $26,000
• B) Credit $24,375
• C) Debit $17,333
• D) Debit $8,125

Understand the measurement principles of inventories according to AASB 102/IAS 2 including the lower of cost and net realisable value.

Comprehend the terms and implications of trade discounts on inventory transactions.

Identify and apply appropriate inventory costing methods to various inventory types.

Recognize the inclusion and exclusion of certain costs in the cost of inventories.