Beta Ltd commenced business on 1 January and is making up its first year€™s accounts. The company uses standard costs. The company owns a variety of raw materials and components for use in its manufacturing business. The accounting records show the following:

Raw materials control account balance at year-end is £30,000 (at standard cost).

Required:
The company€™s draft statement of financial position includes €˜Inventories, at the lower of cost and net realisable value £80,000€™. This includes raw materials £30,000: do you consider this to be acceptable? If so, why? If not, state what you consider to be an acceptablefigure.

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Adverse (favourable) variances Standard cost of purchases Price variance Usage variance 0,000 2,000 9,000 8,000 2,000 800 1,100 700 (400) 100 August September October November December Cumulative figures for whole year 200 1,000 800 8,700 2 (200) (600) 110,000