What is inventoriable cost?
Understand the Problem
The question is asking for the definition and understanding of 'inventoriable cost', which is a term used in accounting to refer to costs that are included in the value of inventory. This includes costs related to manufacturing and acquiring goods that will eventually be sold to customers. To address the question, I will explain what inventoriable costs are and provide examples.
Answer
direct manufacturing and preparation costs
Inventoriable costs are the direct costs associated with manufacturing products and preparing them for sale.
Answer for screen readers
Inventoriable costs are the direct costs associated with manufacturing products and preparing them for sale.
More Information
Inventoriable costs typically include direct labor, direct materials, factory overhead, and freight-in costs necessary for preparing the goods for sale.
Tips
A common mistake is to confuse inventoriable costs with period costs; inventoriable costs are associated with production, while period costs pertain to non-manufacturing activities.
Sources
- What are Inventoriable Costs? - Corporate Finance Institute - corporatefinanceinstitute.com
- What is an inventoriable cost? - Universal CPA Review - universalcpareview.com
- Inventoriable costs - AccountingTools - accountingtools.com
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