A manufacturer of candy has in stock 100 kilograms of blueberry fillings and 50 kilograms of...

 

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A manufacturer of candy has in stock 100 kilograms of blueberry fillings and 50 kilograms of finished goods as at the end of year 6. The cost of the filling is RM12 per kilogram. One kilogram of candy uses 500 grams of blueberry fillings and the total cost of manufacturing a kilogram of candy is RM15. The selling price of a kilogram of candy in year 6 is RM30. At the end of year 6, the selling price of the candy drops to RM25 per kilogram. At the same time the replacement cost of blueberry fillings drops to RM10 per kilogram. The costs of other material remain unchanged. Required: a. Should the carrying amount of blueberry fillings and candy be written down? (5 marks) b. Suppose the selling price of candy drops to RM14, what will be the value assigned to the inventories? A manufacturer of candy has in stock 100 kilograms of blueberry fillings and 50 kilograms of finished goods as at the end of year 6. The cost of the filling is RM12 per kilogram. One kilogram of candy uses 500 grams of blueberry fillings and the total cost of manufacturing a kilogram of candy is RM15. The selling price of a kilogram of candy in year 6 is RM30. At the end of year 6, the selling price of the candy drops to RM25 per kilogram. At the same time the replacement cost of blueberry fillings drops to RM10 per kilogram. The costs of other material remain unchanged. Required: a. Should the carrying amount of blueberry fillings and candy be written down? (5 marks) b. Suppose the selling price of candy drops to RM14, what will be the value assigned to the inventories?

Answer rating: 100% (QA)

Answer a No the carrying amount of blueberry fillings and candy should not be written down b The value assigned to the inventories would be RM12 per k... View the full answer