ECONOMICS

Detailed explanation-1: -What are Inventoriable Costs? Inventoriable costs, also known as product costs, refer to the direct costs associated with the manufacturing of products and in getting them ready for sale. Often, inventoriable costs include direct labor, direct materials, factory overhead, and freight-in.

Detailed explanation-2: -Example of Inventoriable Costs The purchase cost of the refrigerators, as well as the cost to ship them from China to Peru, to pay import fees in Peru, and to ship them to the store for sale are all inventoriable costs.

Detailed explanation-3: -Production costs, which are also known as product costs, are incurred by a business when it manufactures a product or provides a service. These costs include a variety of expenses. For example, manufacturers have production costs related to the raw materials and labor needed to create the product.

Detailed explanation-4: -The three general categories of costs included in manufacturing processes are direct materials, direct labor, and overhead.