CERTYNEX IFRS ACADEMY

Rivaldi manufactures, for a particular hotel, a set of furniture designed specifically for it; the order is in progress at the reporting date. Costs incurred: materials used 40,000; direct labour 25,000; production overheads allocated 15,000; design of the furniture for this hotel 6,000; wood wasted through a faulty setting, a loss considered abnormal, 3,000; commercial presentation to other hoteliers 2,000; storage of finished pieces not necessary for the rest of the manufacturing 1,000. Rivaldi considers that these design costs help bring the order to its present condition. What is the cost of the inventory at the reporting date?

86,000: materials, labour, production overheads and design.

80,000: design costs are never included in the cost of inventories.

89,000: the wasted wood is part of the production cost of the order.

92,000: all costs incurred for this order are included until it is delivered to the customer.