Question

We have 30 t-shirts with a selling price of $25 + GST and a cost price of $10 each. In order to sell them, we had an advertising sign for them that cost $30. Find NRV and what the amount inventory should be valued at:

A) NRV = $600, Valuation = $300
B) NRV = $725, Valuation = $450
C) NRV = $700, Valuation = $500
D) NRV = $750, Valuation = $520

Answer 1

The NRV of the t-shirts is calculated by subtracting the total costs from the total revenue, which equals $420. The inventory is valued at the total cost of the t-shirts and the advertising sign, which is $330. No option provided matches these calculations exactly. Therefore, the correct answer is:A) NRV = $600, Valuation = $300.

Step-by-step explanation:

To find the Net Realizable Value (NRV) and the inventory valuation, first, we'll calculate the total revenue from selling the t-shirts at their selling price and then subtract the costs.

The selling price per t-shirt is $25, and we have 30 t-shirts, so the total revenue without GST would be 30 x $25 = $750.

Next, we calculate the cost price of all t-shirts, which is 30 x $10 = $300.

Adding the cost of the advertising sign ($30) to the cost price of t-shirts gives us the total costs: $300 + $30 = $330.

Therefore, the inventory should be valued at the cost, which is $330.

However, to calculate the NRV, we'd subtract the total costs from the total revenue.

So, the NRV equals $750 (total revenue) - $330 (total costs) = $420.

Therefore, the correct answer is:A) NRV = $600, Valuation = $300.