Question

A company manufactures aluminum cans for the beverage industry and prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). During its latest full fiscal year, the company recorded the following:

Inventory Item Amount € (thousands)
Raw material aluminum costs 150,000
Storage of finished cans 15,000
Wasted aluminum materials from abnormal production errors during the year 500
Transportation-in costs 640
Tax-related duties 340
Administrative overhead 7,500
Trade discounts due to volume purchases throughout the year 520

The total costs included in inventory (in € thousands) for the year are closest to: ____________

Answer 1

Answer: 150,460 currency units

Step-by-step explanation:

The costs that are included in inventory include:

• Cost of raw materials
• Transportation in costs
• Tax duties
• Trade discounts

Inventory cost is:

= Cost of raw materials + Transport in costs + Tax duties - Trade discounts

= 150,000 + 640 + 340 - 520

= 150,460 currency units