The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Which of the following cost shall be included in the cost of inventories? a. Administrative overheads that do not contribute to bringing inventories to their present location and condition. b. Abnormal amounts of wasted materials, labor or other production costs. c. Storage costs unnecessary in its production process.

The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Which of the following cost shall be included in the cost of inventories? a. Administrative overheads that do not contribute to bringing inventories to their present location and condition. b. Abnormal amounts of wasted materials, labor or other production costs. c. Storage costs unnecessary in its production process.

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter12: Contracts And Sales:introduction And Formation

Section12.2: Sources Of Contract Law

Problem 3CQ

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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

a. Administrative overheads that do not contribute to bringing inventories to their present location and condition.

b. Abnormal amounts of wasted materials, labor or other production costs.

c. Storage costs unnecessary in its production process.

d. Import duties and other taxes, transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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