Hmm, if the lot production costs are higher than the inventory costs, then the 'Gain from production differences' seems like the logical choice. But who knows, with these exam questions, it's always a guessing game.
Ugh, I hate these tricky accounting questions. Why can't they just ask us something straightforward, like 'What's the square root of 144?' Now, that's the kind of math I can handle!
Okay, let's think this through. If the perpetual cost method is standard, then the WIP clearing run should post a 'Correction of the finished goods inventory', right? That's gotta be the answer.
Wait, if the lot production costs are higher than the inventory costs of the finished goods, wouldn't that mean we're losing money on each item produced? This 'WIP clearing run' sounds like a trick question to me.
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