What are inventoriable costs?
Understand the Problem
The question is asking about the concept of inventoriable costs, which are costs that are included in the inventory of a company and are expensed when the inventory is sold. It revolves around understanding what types of costs can be classified as inventoriable.
Answer
Costs directly tied to manufacturing and preparing products for sale.
The final answer is that inventoriable costs are the direct costs associated with the manufacturing of products and in getting them ready for sale.
Answer for screen readers
The final answer is that inventoriable costs are the direct costs associated with the manufacturing of products and in getting them ready for sale.
More Information
These costs typically include direct labor, direct materials, factory overhead, and freight-in. They are essential for accurately determining the cost of goods sold and valuing inventory.
Tips
A common mistake is confusing inventoriable costs with period costs, which are not directly tied to production and are expensed in the period incurred.
Sources
- The web page with info on - Corporate Finance Institute - corporatefinanceinstitute.com
- Inventoriable costs - AccountingTools - accountingtools.com
- What are inventoriable costs? | AccountingCoach - accountingcoach.com
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