Asked by Konner Powers on May 10, 2024
Verified
If an inventory item has a base cost to the company of $50, and requires three hours of labor at $15/hr. to be turned into a salable item, the value of that piece of inventory is at least:
A) $65.
B) $165.
C) $95.
D) $45.
Base Cost
The original value or purchase price of an asset for tax purposes, used to determine capital gains or losses.
Salable Item
A product or good that can be sold in the market.
- Evaluate inventory valuation and the inclusion of labor and material costs.
Verified Answer
SS
Shifa SohailMay 12, 2024
Final Answer :
C
Explanation :
The value of the piece of inventory is calculated by adding the base cost to the company ($50) to the cost of labor required to turn it into a salable item (3 hours at $15/hr., which totals $45). Therefore, $50 + $45 = $95.
Learning Objectives
- Evaluate inventory valuation and the inclusion of labor and material costs.
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