MN-2052 (January 2021) Question 3 Page 5 Britannia Ltd buys and sells two products: Prosecco and Cava. The business incurs the following unit costs in relation to the products: Prosecco Cava Purchase Cost 200.00 300.00 Delivery costs from supplier 30.00 40.00 Delivery costs to customers 35.00 35.00 Sales and marketing costs 25.00 28.00 Selling price 250.00 595.00 General administration expenses 12.50 26.50 Import duty 2.20 3.60 Required: With reference to IAS 2, Inventory: a) State the principal used to value inventories for inclusion in the financial statements of a business. [1 mark] b) Explain the terms 'Cost' and 'Net Realisable Value' in relation to inventory valuation in the financial statements. [6 marks] c) Calculate the figure to be included in closing inventory for a unit of Prosecco and a unit of Cava. [13 marks] [Total 20 marks]