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SR Ltd makes finished good MP from raw material RP. Cost of MP is ₹27 per unit (material ₹12 + labour ₹8 + fixed overhead ₹7). Selling price of MP is ₹22 per unit; replacement cost of RP is ₹11.50 per unit. Closing stock: MP 4,200 units, RP 4,000 units. What is the total value of SR Ltd's closing inventory (finished goods plus raw material) under AS 2?
A₹1,40,400
B₹1,46,000
C₹1,30,000
D₹1,38,400
Answer & Solution
Correct answer: D. ₹1,38,400
1. Finished goods MP = 4,200 × ₹22 = ₹92,400.
2. Raw material RP = 4,000 × ₹11.50 = ₹46,000.
3. Total closing inventory = ₹92,400 + ₹46,000 = ₹1,38,400.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 — Q.1(b), AS 2 Valuation of Inventories._
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