BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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PURCHASE PRICE
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IMPORT DUTIES
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ABNORMAL AMOUNT OF WASTED MATERIALS
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FIXED AND VARIABLE PRODUCTION OVERHEAD
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Detailed explanation-1: -Interest and other borrowing costs are usually considered as not relating to bringing the inventories to their present location and condition and are, therefore, usually not included in the cost of inventories.
Detailed explanation-2: -Abnormal costs related to freight, handling, and wasted materials (spoilage) should be included in current period charges rather than deferred as a portion of inventory costs.
Detailed explanation-3: -The cost of inventory includes the cost of purchased merchandise, less discounts that are taken, plus any duties and transportation costs paid by the purchaser.
Detailed explanation-4: -Inventory includes Raw material, semi finished goods and finished products. So, here consumer goods which are sold to the households during the accounting year will not be included in inventory.