Reference no: EM13341511
Background:
Mr David Buttoneer the owner operator of Buttons by David Pty Ltd. runs a number of button lines. His favourite is a cut stag-horn button that has gold filigree. Using a variable costing approach, the revenues and costs per 100 buttons is:
Required:
However, the stag-horn button line is not popular with the customers and generates a substantial loss. Currently, the company has 30,000 stag horn buttons in inventory.
As the External Auditor and using a standard format memo (i.e. a short report of ½ to 1½ pages) please explain to Mr David Buttoneer:
1) The concept of valuing Inventories at the "Lower of Cost or Market" (cite the AASB Handbook section),
2) The estimated "full absorption cost" of manufacturing 100 stag horn buttons, and
3) The appropriate value for the stag horn buttons inventory in total and per 100 buttons
- show calculations to justify your answer.
This is to be answered in your groups of 3-6 students, where each group will submit one report with the names and student numbers of all group members in the heading. This assignment is due 20 May/14, in class.
The marking rubric that will guide the marking is posted to the assignment section of the HA3032 Blackboard site.