The Following Information Relates to the Total Production Costs and Estimates

question 46

Multiple Choice

The following information relates to the total production costs and estimates of realisable value for a line of water pistols produced by Splash Happy Co Ltd.
$\begin{array}{|l|r|r|r|r|}\hline {\text { Item }} & \begin{array}{c}\text { Production cost } \\\$ 000\end{array} & \begin{array}{c}\text { Sales proceeds } \\\$ 000\end{array} & \begin{array}{c}\text { Packaging costs } \\\$ 000\end{array} & \begin{array}{c}\text { Transport costs } \\\$ 000\end{array} \\\hline \text { Big Bang } & 8 & 17 & 5 & 2 \\\hline \text { Little } & 10 & 13 & 1 & 1 \\\hline \text { Splash } & 19 & 25 & 4 & 3\\\hline\end{array}$
Packaging and transport costs are necessarily incurred in order to be able to sell the inventory.What is the value of the inventory in accordance with AASB 102?

• A) $37 000
• B) $21 000
• C) $39 000
• D) $36 000

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Definitions:

Adsorption

The process by which atoms, ions, or molecules from a substance (it could be a gas, liquid, or dissolved solid) adhere to a surface of another substance.

Corrosion

The process of degradation of materials, especially metals, due to chemical reactions with their environment, leading to weakening and damage.

Fractures

Breaks, cracks, or splits in bones or geological formations, often resulting from stress or impact.

Leaks

Unintended escape of fluids (gas or liquid) from a container or system to the environment.