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JAMB Principles of Accounts 2000 Question 43

Question 43

Departmental Accounts

The most appropriate basis for apportioning inventory holding cost among departments is to use the value of

  1. A.purchases
  2. B.opening stock
  3. C.closing stock
  4. D.average stock.
Show the answer and explanation

Answer: D (average stock.)

Explanation

Holding costs depend on how much stock each department keeps during the period, best measured by average stock.