Twenty Units of Inventory on Hand at the End of the Year

question 133

Multiple Choice

Twenty units of inventory on hand at the end of the year are recorded at their cost of $5.00 per unit using FIFO.Current replacement cost is $4.50 per unit.What amount would be reported as inventory on the balance sheet?

• A) $100.00
• B) $5.00
• C) $4.50
• D) $90.00

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Definitions:

Unavoidable Waste

Waste that cannot be reduced or eliminated during the production process due to inherent limitations or efficiency constraints.

Unexpected Spoilage

Loss or waste of materials, products, or resources that occurs unexpectedly during the production process and is not a part of planned spoilage.

Normal Spoilage

Normal spoilage refers to the expected amount of waste or loss of materials during a production process, considered as a usual and unavoidable cost of doing business.

Unfavorable Variance

A situation where actual costs exceed budgeted or expected costs, often indicating poorer than expected financial performance.