the company assesses the inventory at full production cost. explain (without figures) how it will affect the calculated return on equity (EKR) for 2021 if the company had used a variable manufacturing cost when assessing inventories. Can this company choose variable delivery cost as a valuation principle for self-produced goods?

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.