What Is Net Realizable Value? How Is Net Realizable Value

question 20

Essay

What is net realizable value? How is net realizable value affected when a receivable is written off under the allowance method?

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Definitions:

Variable Manufacturing

Costs that vary directly with the level of production output, including direct materials, direct labor, and variable manufacturing overhead.

Fixed Manufacturing

Expenses that do not vary with the level of production or sales, such as rent, salaries, and equipment depreciation.

Static Budget

A budget that does not change or adjust with variations in sales volume or business activity.

Original Planned

Pertains to the initial strategy or set of actions that were designed to achieve a specific outcome or goal.