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 2011 year-end:
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 2011, what is the effect on
i)2011 and 2012 inventory on the balance sheet
ii)2011 and 2012 cost of goods sold
iii)2011 and 2012 net income
iv)2011 and 2012 retained earnings

Question

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 2011 year-end:
  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 2011, what is the effect on
i)2011 and 2012 inventory on the balance sheet
ii)2011 and 2012 cost of goods sold
iii)2011 and 2012 net income
iv)2011 and 2012 retained earnings

Quizplus · Accepted Answer

The Answer of 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 2011 year-end:
  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 2011, what is the effect on
i)2011 and 2012 inventory on the balance sheet
ii)2011 and 2012 cost of goods sold
iii)2011 and 2012 net income
iv)2011 and 2012 retained earnings

A Particular Production Process Requires Two Types of Raw Materials