Net Realisable Value of Inventory Refers To

question 11

Multiple Choice

Net realisable value of inventory refers to:

• A) estimated selling price of the inventory.
• B) estimated selling price of the inventory less estimated costs of completion.
• C) estimated selling price of the inventory less estimated costs of completion and the estimated costs necessary to make the sale.
• D) estimated cost of acquiring the inventory.

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Definitions:

Direct Labour Cost

The expense incurred for workers who are directly involved in the production of goods or services.

Manufacturing Costs

Costs directly associated with the production of goods, including materials, labor, and factory overhead.

Conversion Costs

The combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished products.

Downstream Costs

Expenses incurred after the manufacturing process, such as distribution and marketing.