Chapter 6, Problem 3AA

To determine

(1)

Inventory refers to the goods which are available for sale during the current year. At the end of the financial year, if the company has some inventory which is left unsold, then this inventory is shown as ‘inventory’ balance sheet’s assets sides.

To discuss:

The value of inventory in the company-S balance sheet in 2017 and 2016.

To determine

(2)

Income under variable costing is computed by adding “fixed overhead cost in the ending inventory” and subtracting “fixed overhead cost in the beginning inventory” to the income calculated as per absorption costing.

To compute:

The income statement under variable costing method.