A Particular Production Process Requires Two Types of Raw Materials

question 99

Essay

A particular production process requires two types of raw materials to produce the end product. Each unit of finished product requires three units of raw material A and 2 units of raw material B, plus processing costs of $35. The following provides information on inventories at fiscal 2019 year-end:
$\begin{array} { | l | r | r | r | r | } \hline \text { Inventoryitem } & & & \begin{array} { r } \text { Replacement } \\\text { cost }\end{array} & \begin{array} { r } \text { Net realizable } \\\text { value }\end{array} \\\hline \text { Finished goods } & \text { \# units } & \text { Cost per unit } & \text { NA } & 161 \\\hline \text { Raw material A } & 800 & 181 & 17 & \text { NA } \\\hline \text { Raw material B } & 150 & 10 & 53 & \text { NA } \\\hline\end{array}$
Required:
a. Evaluate these inventories to determine the amount of write-down, if any.
b. If the entry required in part (a)is not made in fiscal 2019, what is the effect on
i)2019 and 2020 inventory on the balance sheet
ii)2019 and 2020 cost of goods sold
iii)2019 and 2020 net income
iv)2019 and 2020 retained earnings

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Definitions:

Adult Stem Cells

Undifferentiated cells found throughout the body that have the capacity to generate various cell types, aiding in repair and regeneration.

Embryonic Stem Cells

Pluripotent stem cells derived from the early embryo, capable of differentiating into any cell type in the body.

Induced Pluripotent Stem Cells

Stem cells created by reprogramming adult cells to an embryonic stem cell-like state by introducing specific genes.

Muscular System

The body system consisting of muscles that permit movement, maintain posture, and produce heat.