Which of the Following Should Be Included in the Cost

question 18

Multiple Choice

Which of the following should be included in the cost of the inventory?

• A)Salaries paid to warehouse employees.
• B)The construction cost of shelves used to store inventory.
• C)Shipping and handling on inventory purchases.
• D)Advertising of inventory for sale.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities required to produce them, aiming for more accurate cost allocation.

Idle Capacity

Unused production capability in a given period, often resulting in inefficiency and increased costs.

Supervisory Wages

Costs associated with the salaries of supervisory personnel, considered part of manufacturing overhead in production environments.

Activity-based Costing

Activity-based costing is an accounting method that assigns costs to products based on the activities they require.