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A manufacturer reports materials of $18,000, work in process of $31,000 and finished goods of $26,000. What total inventory appears in current assets?
A$49,000
B$57,000
C$44,000
D$75,000
Answer & Solution
Correct answer: D. $75,000
1. A manufacturer reports product costs as three inventories in the current assets section of the balance sheet.
2. The three balances are materials $18,000, work in process $31,000 and finished goods $26,000.
3. Total inventory is $18,000 plus $31,000 plus $26,000, which is $75,000.
4. Leaving out any one of the three understates total inventory, which is what the other amounts do.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 1.3 Inventory Terminology and Concepts_
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