Suppose That Badger's 2010 Ending Inventory, Valued at Year-End Costs

Multiple Choice

Suppose that Badger's 2010 ending inventory, valued at year-end costs, was $143,000 and that the relative cost index for this inventory in 2010 was 1.10. In determining the inventory balance should Badger report in its 12/31/10 balance sheet:

A) An additional layer of $23,000 is added to the 1/1/10 balance.
B) An additional layer of $22,000 is added to the 1/1/10 balance.
C) An additional layer of $11,000 is added to the 1/1/10 balance.
D) None of these is correct.$143,000/1.10 = $130,000.This includes the previous two layers, the first at $100,000 and the second at $20,000, plus another at $10,000.The third is then brought forward to 12/31/10 by $10,000 1.10 = $11,000.