Acme Enterprises, a hypothetical company that prepares its financial statements inaccordance with IFRS, manufactures tables. In 2009, the factory produced 900,000finished tables and scrapped 1,000 tables. For the finished tables, raw material costswere €9 million, direct labor conversion costs were €18 million, and productionoverhead costs were €1.8 million. Th e 1,000 scrapped tables (attributable to abnormal waste) had a total production cost of €30,000 (€10,000 raw material costs and€20,000 conversion costs; these costs are not included in the €9 million raw materialand €19.8 million total conversion costs of the finished tables). During the year,Acme spent €1 million for freight delivery charges on raw materials and €500,000 forstoring finished goods inventory. Acme does not have any work-in-progress inventoryat the end of the year. 1. What costs should be included in inventory in 2009?2. What costs should be expensed in 2009?
Acme Enterprises, a hypothetical company that prepares its financial statements in
accordance with IFRS, manufactures tables. In 2009, the factory produced 900,000
finished tables and scrapped 1,000 tables. For the finished tables, raw material costs
were €9 million, direct labor conversion costs were €18 million, and production
overhead costs were €1.8 million. Th e 1,000 scrapped tables (attributable to abnormal waste) had a total production cost of €30,000 (€10,000 raw material costs and
€20,000 conversion costs; these costs are not included in the €9 million raw material
and €19.8 million total conversion costs of the finished tables). During the year,
Acme spent €1 million for freight delivery charges on raw materials and €500,000 for
storing finished goods inventory. Acme does not have any work-in-progress inventory
at the end of the year. 1. What costs should be included in inventory in 2009?
2. What costs should be expensed in 2009?
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