Neotel Plc produces and sells three products: Alpha, Beta and Gamma. The following information is available for the year ended 31 December 2019 (on a unit basis):

With reference to IAS 2, Inventory:

a) State the principle used to value inventory items for inclusion in the financial statements of a business.

b) Calculate the total inventory that would be reported in the financial statements of Neotel Plc.

c) Explain the terms Cost and Net Realisable Value in relation to inventory valuation in the financial statements.

d) Valuing inventory appropriately has an important impact upon the financial statements of an entity. Outline the effect on the statement of profit or loss and the statement of financial position if closing inventory is over-valued.

Inventory Item Costs Incurred 5.50 6.25 2.75 Costs to Complete 1.25 Units in Inventory Sales Price 14.25 6.50 7.10 Costs to Sell 2.30 0.50 1.20 Alpha Beta Gamma Nil 1,000 2,500 950 4.10